Volkswagen AG cut its vehicle sales expectations for the year as chip availability remains scarce and logistics continue to pose a challenge.
(Bloomberg) — Volkswagen AG cut its vehicle sales expectations for the year as chip availability remains scarce and logistics continue to pose a challenge.
Europe’s biggest carmaker now sees deliveries on par with last year, when semiconductor shortages already severely hampered car output, VW said Friday. Previously the automaker targeted shifting between 5% to 10% more cars than a year ago.
“We will be faced with crises during the next decade, geopolitical crises, supply-chain issues,” Chief Executive Officer Oliver Blume said in an interview with Bloomberg Television. “The best you can do is to have financial resilience and to prepare yourself to be flexible in the global regions.”
VW also reported third-quarter results that missed expectations due to costs related to supply-chain problems while recording one-off charges on its business in Russia and the listing of Porsche AG that totaled €1.6 billion ($1.6 billion). The sports-car maker, which also reported initial results following the September share sale, said its return on sales rose as customers bought high-margin models.
VW’s preferred shares declined 2.9% in early Frankfurt trading, taking losses this year to 28%. Porsche, whose market valuation exceeded that of its much larger parent within days of the listing, fell 2.5%.
What Bloomberg Intelligence Says:
Volkswagen has numerous one-time charges in 3Q that dampened its headline Ebit margin to 6%, but on an adjusted basis this rose to 8.3%, in-line with our expectations and corresponds to the top end of management’s 7-8.5% target for 2022 and vs. 8.8% in 1H. VW reiterated earnings guidance toward the upper part of its projected 2022 range, though the market’s focus on software and an impending global recession suggest cuts to 2023 consensus loom — not just for VW, but for the entire auto industry.
— Michael Dean, BI automotive analyst
Volkswagen 3Q Margin Robust, Though Lacks 2023 Visibility: React
Carmakers are emerging from a period of setbacks dominated by crippling supply-chain woes to contend with a weakening economy. For now, the picture remains uneven with manufacturers working down full order books after months of disrupted production. But with recession fears mounting, consumer demand has started to slow. Ford Motor Co. earlier this week trimmed its profit forecast for the year because of shortages and higher payments to suppliers.
VW on Friday warned of increasing competitive pressure, indicating unusually high vehicle prices might be slipping. Carmakers have navigated the chip crisis by both swinging production to their most lucrative models and raising prices as vehicle availability dwindled. Meanwhile, VW said it continues to struggle to keep up with strong demand for fully electric cars with a high order bank in Europe of 350,000 vehicles.
As the economic outlook darkens, VW joined Ford in a surprise decision this week to cease all activities with US driverless vehicle company Argo AI following multi-billion investments by both partners. The decision will result in a €1.9 billion non-cash impairment charge, VW said Friday. The company is continuing autonomous technology development through its Cariad software unit and with partner Robert Bosch GmbH.
VW’s third-quarter operating profit before special items jumped 65% to €4.3 billion from a year ago, as some of the most severe supply-chain problems eased. That compared with a Bloomberg consensus forecast of €4.6 billion.
–With assistance from Francine Lacqua.
(Updates with CEO comment third, share price in fifth paragraph)
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