Tuesday March 23, 2021
Lockdown and lack of chips
Investors throw auto stocks out of their portfolios
The bottlenecks in the supply of computer chips are causing problems for the car manufacturer. Now it is also affecting Volvo. A production stop lasting up to four weeks will leave deep marks on profits, it is said. Also because of the announced Easter lockdown, shareholders are looking for the way.
In the European auto sector, after a recovery rally, which was mainly led by VW, cashes in: Daimler’s titles have meanwhile fallen by 2 percent, those of BMW more than 1.0, VW up to 4.5 and Stellantis by 3 , 4 percent. The shares of supplier Conti lost almost 4 percent at the top and the Swedish truck manufacturer Volvo on the Stockholm Stock Exchange even lost 7 percent after a profit warning, which also pulled the German Traton down by almost 4 percent.
Overall, the auto sector brings up the rear in Europe with 1.5 percent. The reason given by observers is the announced Easter lockdown. The ensure that “the recovery expectations slide even further back,” said a trader. A GDP recovery in the second quarter could well be ticked off.
The issue of chip shortages also continues to bother the industry. Swedish commercial vehicle manufacturer Volvo expects the shortage to weigh on production for the entire second quarter. It is difficult to foresee when the situation will improve. Profit and cash flow would suffer.
The rival of Daimler and the Volkswagen holding Traton will, according to its own statements, stop production in the truck plants at the beginning of the second quarter. Overall, depending on the plant, the closing days probably added up to two to four weeks. A trader describes the statements made by the Chinese-owned truck manufacturer as the “most severe profit warning to date due to the lack of chips”.
The subject is well known and has already forced almost all car manufacturers to cut production and even close down factories, but the extent to which Volvo is concerned is greater. The analysts at Citi therefore expect that the EBIT for 2021 will be 10 percent below expectations.
Traton CFO Christian Schulz had also referred the day before to risks due to the pandemic and possible problems with chips. Nevertheless, the VW Holding is aiming for a strong increase in sales and turnover. Daimler also wants to increase sales and revenue significantly in the truck business. In the past year, the market for new commercial vehicles almost came to a standstill due to the corona pandemic. Incoming orders picked up again in the second half of the year.
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