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Billion hole due to chip crisis: Insider: VW produces 800,000 fewer cars

Billion hole through chip crisis
Insider: VW produces 800,000 fewer cars

By Diana Dittmer

Another global problem arises in the corona crisis: acute semiconductor shortages. Worldwide, several million fewer cars are likely to be built than planned. Internal numbers from VW document the growing extent of the drama. Meanwhile, Infineon is signaling the all-clear in Malaysia.

The shortage of chips is making German car manufacturers more and more troublesome. Because there is a lack of semiconductors, almost all manufacturers have had to temporarily close production facilities and send tens of thousands of employees on short-time work. Internal figures from Volkswagen are now intended to document a new dimension of the crisis. According to the business portal Business Insider, the Dax Group expects the bottleneck to result in a loss of production of more than 800,000 vehicles this year. With an average sales price of 30,000 euros per vehicle, this corresponds to lost sales of 24 billion euros.

VW advantages 223.40

The Wolfsburg-based group had previously admitted difficulties due to the lack of chips, but did not provide any specific information about possible expected loads. A spokesman did not want to comment on the current figures either. The company has already made it clear in the past that the shortages in chips have led to a six-digit number of non-produced vehicles, it said. There is no comment on figures going beyond this.

The group also pointed out that “non-produced vehicles” did not allow any conclusions to be drawn about the sales figures. Negative influences would be “noticeably limited by the sale of stock vehicles and other measures”. Whether this will also succeed in the second half of the year cannot be “reliably predicted” at the moment, admitted the group. Despite persistent shortages in semiconductors and an expected drop in sales, Volkswagen intends to adhere to its forecast for the year. The range of an operating margin of 5.5 to seven percent announced for the group is still valid, it said. The main brand VW also remains with its previous forecast of three to four percent operating return for 2021.

Not only Volkswagen is groaning under the semiconductor shortage, the entire industry is desperately looking for solutions to the supply problems. Volkswagen boss Herbert Diess had recently stated that the management was in contact with semiconductor companies such as Infineon and Intel in order to get more capacity for the coming years. Investments are required for this, and a plan is being worked on. It will be some time before the supply problems are resolved.

“At the moment we have reached the lowest point. We are facing the toughest six weeks,” said Volkswagen’s purchasing manager Murat Aksel recently in a newspaper interview. According to him, the worst should be over in the third quarter. At the same time, he restricted the fact that in the long term around ten percent of the chips were missing because not enough was being produced worldwide.

Experts speculate about real costs

According to a study by the management consultancy Alix Partner, 3.9 million vehicles fewer than planned are likely to be built worldwide this year alone due to the semiconductor shortage. However, the extent to which the delays lead to actual costs is controversial among experts. The vehicles are not built, so they don’t have to be parked in parking lots and completed later. So there are no additional costs. In addition, the automakers can partially compensate for the loss of earnings by keeping the prices for the vehicles built and sold more stable than usual.

Nevertheless, the alarm bells are apparently ringing among the Wolfsburgers. Because it requires a particularly large number of chips, the VW brand in particular is on fire at Volkswagen. According to Business Insider, around 600,000 of the non-produced vehicles expected due to the chip bottleneck are VW cars. Because the brand accounts for a third of group sales and the forecast loss of production is so high, brand boss Ralf Brandstätter is now also coming under internal pressure, they say .

The chip bottleneck is, at least in part, a problem that automakers have made themselves. Due to declining sales figures, they canceled semiconductor orders at the beginning of the corona pandemic. The electronics industry took the opportunity to secure the capacities that were freed up for the growing demand for game consoles and PCs in the lockdown situation. When the demand for cars rose faster than expected and VW, Daimler and Co showed interest in semiconductors again, there was no longer enough for everyone. The situation was made more difficult by natural disasters that destroyed two chip factories in Japan and the USA.

All-clear for chip production in Malaysia

Recently reports from Malaysia caused uncertainty, where a new wave of corona has put the factory of the German semiconductor manufacturer Infineon, which is also an important supplier for Volkswagen e-cars, into a new lockdown state. The prescribed production stop in June could worsen the tense situation, warns the Business Insider. However, this situation has not occurred – at least for the time being – as Infineon ntv.de announced. “The Infineon locations in Melaka and Kulim had received the status of an ‘essential industry’ and were therefore able to continue production in principle,” said Infineon spokesman Gregor Rodehüser ntv.de.

This exemption from the government for the systemically important chip industry was cashed in by the health administration at the beginning of the month, so that the location in Melaka had to be closed from June 3, 2021. After two days, however, Infineon had already received permission “to open some production blocks and to enter and operate all eight production blocks on June 8th”. According to the company, an additional worsening of the delivery bottlenecks could thus be avoided.

“Infineon’s plants are running at full speed,” said company spokesman Rodehüser. The imbalance between supply and demand will persist for a few more quarters, “with the risk that it will continue into 2022”. When the situation improves depends primarily on how quickly the contract manufacturers are able to create new capacities.

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