Semiconductor crisis slashes Volkswagen Group profits

The Volkswagen Group has lowered its sales expectations and delivery outlooks because of the impact the global semiconductor crisis has had on its third-quarter profits. 

The group recorded an operating profit of €2.8 billion (£2.4bn) in the three months to October 2021, representing a 12% drop compared with last year, while profit margins dropped from 5.4% to 4.9%. 

“Following a record result in the first half of the year, the semiconductor bottlenecks in the third quarter made it abundantly clear to us that we're not yet resilient enough to fluctuations in capacity utilisation,” said Volkswagen Group chief financial officer Arno Antlitz. 

“This clearly shows that we must continue to work resolutely on improving our cost structures and productivity in all areas. In order to be able to implement our New Auto strategy as planned and finance our transformation towards e-mobility and digitalisation on our own, we need to make decisive improvements.”

The German company's most recent results showed a 24.4% drop in deliveries, with its four largest brands, Volkswagen, Seat, Audi and Skoda each posting operating losses between July and September. 

“The results of the third quarter show once again that we must now systematically drive forward the improvement in productivity in the volume sector,” said Volkswagen Group CEO Herbert Diess.

“We're determined to maintain our strong position against established and new competitors and to vigorously implement the transformation toward climate-neutral, digital mobility with our New Auto strategy.”

The Volkswagen Group expects further challenges to arise from the post-pandemic economic situation, the strategies of rival firms, unstable supply chains and more stringent emissions requirements. 

It's now expecting deliveries to customers to be in line with figures from 2020, taking into account supply shortages and assuming the Covid-19 pandemic is contained. 

Despite the supply issues and operating losses, the Volkswagen Group's electric vehicle (EV) sales continued to grow. It delivered 122,100 EVs last quarter, a rise of 109% compared with last year. 

EV deliveries to customers totaled 293,100, a rise of 138%, while hybrid deliveries rose by 133% to 246,000. 

The Volkswagen Group still anticipates a rise in sales revenue over 2020, with a predicted sales return of between 6.0% and 7.5%.