CEO says Volkswagen has ‘seen the worst’ of chip shortage

CEO Herbert Diess told CNN Business on Thursday that the second largest automaker in the world it has “seen the worst” of a chip shortage that severely affected its third-quarter earnings.

“We had a really challenging quarter,” Diess told Anna Stewart during an interview. “We have better [chip] I supply now and hopefully month after month we can increase. “

The German company, which owns several brands including Audi and Skoda, said operating profit fell 12.1% from the same period last year to 2.8 billion euros ($ 3.3 billion). Deliveries fell 24% to 1.97 million units.

Volkswagen (VLKAF) It said in a statement that the chip crisis had “disproportionately affected” its business in China.

A severe shortage of semiconductors – small computer chips used to make vital vehicle components, including driver assistance systems – has slowed automotive production and forced some plants to close.

Vehicle supply failed to keep pace this year as countries emerged from pandemic lockdowns and consumer demand increased, pushing new and used car prices to new heights.

Consulting firm AlixPartners forecasts that the lack of chips, along with a host of other raw material shortages, will cost the auto industry $ 210 billion this year and reduce vehicle production by 7.7 million units.

Stellantis, formed by last year’s merger of Fiat Chrysler and French automaker PSA Group, said Thursday that the chip shortage led to a 30% loss of planned production last quarter, or about 600,000 vehicles.

Diess said Volkswagen’s supply chain bottlenecks will ease in the coming months, with improvements expected “quarter-over-quarter” in 2022. He said the company has been “building up” and is working to make its supply chains supply are more “robust and resistant”.

Diess said electric vehicle sales doubled compared to last year and that some Volkswagen brands would launch new electric models in the coming weeks.

“Hopefully we can catch up with Tesla (TSLA),” he said.

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