Chip crunch deals blow to Volkswagen as Q3 falls short

Volkswagen cut its outlook for deliveries, toned down sales expectations and warned of cost cuts as an ongoing shortage of chips caused it on Thursday to report lower than expected operating profit for the third quarter. 

As a result of the shortage, the group, which has outlined an ambitious roadmap to become the world leader in electric vehicle (EV) sales, now expects deliveries in 2021 to be only in line with the previous year, having previously forecast a rise.

Revenues at Europe's largest carmaker are now expected to be considerably higher in 2021. Volkswagen had previously expected a significant increase from the 223b euros achieved last year, wording that had indicated stronger growth.

"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 are not yet resilient enough to fluctuations in capacity utilization," Chief Financial Officer Arno Antlitz said.

"This clearly shows that we must continue to work resolutely on improving our cost structures and productivity in all areas."

Third-quarter operating profit came in at 2.8b euros ($3.25 billion), down 12 per cent versus last year and lower than the 2.9b Refinitiv forecasts. The profit margin for the July-September period fell to 4.9 per cent from 5.4 per cent last year.

Volkswagen, which aims to overtake Tesla as the world's largest seller of EVs by the middle of the decade, still confirmed its operating profit margin target of 6.0-7.5 per cent for 2021.

"The results of the third quarter show once again that we must now systematically drive forward the improvement in productivity in the volume sector," Chief Executive Herbert Diess said.