VW cuts delivery forecast amid supply-chain constraints

Volkswagen 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 on Friday. Previously the automaker targeted shifting between 5% to 10% more cars than a year ago.

“As a result of the structural undersupply of semiconductors, the 2022 financial year will continue to be burdened by supply bottlenecks, VW said in a statement. “We expect the supply of semiconductors to improve further in the fourth quarter.”

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 that totalled €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.

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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 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 multibillion 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.

VW’s third-quarter operating profit before special items jumped 65 per cent to €4.3 billion from a year ago, as some of the most severe supply-chain problems eased. — Bloomberg