Volkswagen sees better chip supplies in second half boosting output

Business Standard Volkswagen sees better chip supplies in second half boosting output

Volkswagen AG expects the protracted shortage of semiconductors to ease during the second half of the year and contribute to a surge in output, offsetting months of curtailments.

VW confirmed a projection that deliveries will rise by as much as 10% this year, it said Wednesday, even after production slumped by 12% during the first three months. Strong prices and demand for high-end premium cars helped to offset lower production, it said.

“The overall situation of the world -- with Covid in China, the war in the Ukraine, semiconductors still in short supply -- this is quite a challenging environment,” Chief Executive Officer Herbert Diess said in an interview with Bloomberg TV. “I’m happy we could show resilience in the first quarter.”

The company warned its upbeat forecast hinged on further developments from the war in Ukraine and China’s strict coronavirus policies weighing on the global economy. The company has managed to navigate the shortages of chips and wire harnesses from suppliers in Ukraine by reallocating resources between its main markets in Europe, China and North and South America, it said.

The shares were almost unchanged in Frankfurt trading and have declined 16% since the start of the year.

So far, carmakers like Mercedes-Benz AG and BMW AG have come through the supply-chain crisis by raising sticker prices for new and used vehicles to offset the drop in production. Still, while demand remains strong, record price swings in commodity markets and the ongoing war in Ukraine are clouding the outlook.

While Volkswagen has halted its operations in Russia, it also had to temporarily shut some sites in Europe after suppliers of wire harnesses in Ukraine were unable to deliver components. As Europe weighs reducing its dependence on Russia for oil and natural gas, Diess acknowledged that Volkswagen was concerned with threats to the energy supply at its factories.

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