Friday 29 October 2021
Semiconductor shortage slows sales
Daimler increases profit despite chip crisis
The chip crisis has the automotive industry firmly under control – the production lines are at a standstill in many plants, and sales of new cars are falling. Daimler also has to cut production and sells almost a third fewer vehicles than in the previous year. There are several reasons why profits are still increasing.
Despite the slump in sales due to the chip crisis, Daimler increased profits in the third quarter. The operating result adjusted for special effects climbed by four percent to 3.6 billion euros, as the Stuttgart-based carmaker announced. Although sales of cars and trucks fell by 25 percent, sales from July to September of 40.1 billion euros were almost at the previous year’s level. “We are staying on course to achieve our goals for the year as a whole,” said CFO Harald Wilhelm.
Sales and operating profit are expected to be significantly higher than the previous year in 2021. A more favorable product mix and high price stability would have helped to partially offset semiconductor-related supply bottlenecks and higher raw material prices. The supply of semiconductors will improve in the fourth quarter, but there will still be a shortage in the coming year.
The shortage of chips as a result of the corona pandemic led to production breaks at Daimler, as at other car manufacturers, which reduced supply. Mercedes-Benz Cars and Vans sold 471,404 vehicles, 30 percent less than in the same period of the previous year. Mercedes has therefore lowered its car sales forecast to a slight decline compared to the previous year, while van sales are expected to remain stable. “The demand for all products remains strong in all markets,” explained Daimler. This enabled the brand with the star to have “high price stability”.
The expensive top models such as the S-Class and the Group’s electric cars were able to increase deliveries in the third quarter – among other things, because Mercedes primarily equips the more lucrative cars with the existing electronic semiconductors. The price environment for car manufacturers is currently favorable, also because of the limited production: High demand and long delivery times have ensured that hardly any discounts need to be given at the moment. This is providing a boost, especially in the business with company cars and car rental companies.
In the case of trucks and buses, which will be spun off under the name of Daimler Truck AG, sales in the third quarter were seven percent above the previous year’s figure. But there were also problems with the delivery of chips in the truck business, especially with the lucrative heavy-duty trucks for which Daimler is the world market leader. Sales fell slightly. Orders for almost 161,825 trucks were received in the third quarter – almost two thirds more than a year ago.
In the case of Daimler shares, dealers expected profit-taking after the stock had risen by more than 20 percent in the past few weeks.