VW lowers car deliveries outlook over chip woes

German carmaker Volkswagen posted strong first-half profits on Thursday but cut this year’s forecast for car deliveries over a worsening shortage of semiconductor chips.

The 12-brand group—including Porsche, Audi, Seat and Skoda—nevertheless lifted its profit target for 2021 after high-end vehicles drove a “record” performance over the first six months.

VW said it was now targeting an operating return on sales, a closely-watched measure of performance, of 6.0 to 7.5 percent. The previous goal had been 5.5-7.0 percent.

Adjusted operating profits, before special items, reached 11.4 billion euros ($13.5 billion), higher than the 10 billion euros achieved over the same period in pre-crisis 2019—the year before coronavirus lockdowns pummelled the auto industry.

VW chief executive officer Herbert Diess welcomed “the record result”.

“The premium segment performed especially well with double-digit returns,” he said in a statement.

But while the group said it had managed to contain the impact from the global shortage of semiconductors so far, the fallout would likely be “more pronounced” in the third quarter.

Like other carmakers, VW has recently been forced to trim production at some plants because of a supply crunch of the crucial computer chips, fuelled by a pandemic-driven surge in demand for home electronics.

The effects could already be felt in key market China, where VW said it had recently recorded declines.

“The risk of bottlenecks and disruption in the supply of semiconductor components has intensified throughout the industry,” VW said, adding that it was lowering its full-year deliveries forecast.

It now expects deliveries to customers to be “noticeably up” on 2020, assuming the economic recovery from the pandemic stays on track.

VW had previously estimated that deliveries would be “significantly” higher.

Diess also noted that the group’s e-offensive was “picking up momentum”, with 171,000 all-electric vehicles delivered worldwide, a jump of 165 percent year-on-year.

The group, which is spending tens of billions of euros on the industry-wide shift towards greener cars, has set its sights on become the world leader in electric vehicle sales.

VW expects battery-powered cars to make up half its sales by 2030, and “almost 100 percent” by 2040.

© 2021 AFP