Volkswagen said supply bottlenecks were the new norm as its third quarter earnings stagnated below pre-pandemic levels, under the burden of its Porsche listing and the write-off of a self-driving startup, as well as issues securing parts.
The carmaker lowered its expectations for deliveries this year to be on par with 2021, down from a previously-forecast 5 percent-10 percent rise, but maintained its earnings outlook of hitting the upper end of a 7 percent-8.5 percent margin.
“Challenges to our supply chain will become the rule, not the exception,” Chief Executive Oliver Blume said, citing barriers to technology transfers between East and West.
A lack of semiconductors and other critical parts meant the carmaker has 150,000 unfinished vehicles and is stocking up on supplies to protect against further shortages in winter, Chief Financial Officer Arno Antlitz said in an earnings call.
He also said order books were filling up, with some models sold out for eighteen months.
Volkswagen reported third-quarter earnings of 4.3 billion euros ($4.29 billion), following 1.6 billion in one-off effects from the suspension of Russian activities and the Porsche listing.
Earnings of 6 percent across the group were boosted by a 19.4 percent margin in the sports and luxury brands, which are more able to pass on rising costs by hiking prices than volume brands whose buyers are squeezed by inflation.
Volkswagen’s shares fell 2.7 percent in early trade, underperforming Germany’s DAX, which fell 0.8 percent.
The results beat last year’s third quarter when chip shortages reduced sales across the auto industry, but they lagged pre-pandemic profits even as luxury carmakers, such as Mercedes-Benz, caught up with 2019 earnings this quarter.
Porsche has overtaken its former parent Volkswagen as Europe’s most valuable carmaker following its listing in September.
Volkswagen’s difficulties also included a 1.9 billion euro non-cash impairment charge resulting from the write-down of its investment in Argo, a self-driving startup it jointly owned with Ford Motor.
Ford and Volkswagen joined forces in July 2019 to share control of the Pittsburgh-based company developing technology for driverless vehicles, which will shut operations.
VW’s initial investment was valued at $2.6 billion, including $1 billion in cash and the $1.6 billion value of Volkswagen’s European self-driving unit, which was absorbed into Argo. VW also bought Argo shares from Ford for $500 million.
Both companies shifted spending from the business on Wednesday, dragging Ford into a net loss with a non-cash pretax impairment of $2.7 billion.