Supply shortage puts brakes on car giants

Car manufacturing giants Volkswagen and Stellantis say they have a combined 1.4m vehicles in lost production in the third quarter due to the global semiconductor chip shortage.

Thu, 28 Oct, 2021 - 15:34

The global semiconductor chip shortage cost Volkswagen and Stellantis a combined 1.4 million vehicles in lost production in the third quarter, Europe's two biggest carmakers said, though both reported some early signs of improvement.

Volkswagen, Europe's top car company and also the world's number two, cut its outlook for deliveries, toned down sales expectations and warned of cost cuts as it reported lower-than-expected quarterly operating profit.

The German carmaker said it had made around 800,000 fewer cars, or about 35% less than in the same quarter in 2020.

Stellantis, the world's fourth-largest carmaker formed by the merger of Fiat-Chrysler and Peugeot maker PSA, posted a 14% fall in pro-forma quarterly revenue after chip shortages cut planned quarterly production by 30%, or 600,000 vehicles.

Stellantis finance chief Richard Palmer reported a "moderate" improvement in chip supply in October, and expected that to continue through the fourth quarter.

Cut production

But he added supply chain problems meant it was hard to make predictions about the scarcity of automotive semiconductors, which has plagued the industry for most of the year.

"Visibility on semiconductors continues to be a difficult subject for the industry," Mr Palmer said.

Carmakers, which shuttered plants as the global pandemic took hold last year, have found themselves competing against the sprawling consumer electronics industry for chip supplies.

Volkswagen made a third-quarter operating profit of €2.8bn, down 12% on last year.

Meanwhile, Toyota’s global production fell by more than a third in September from a year earlier, hurt by disrupted access to semiconductors and other key car parts that’s weighing on Japan’s automakers.

Nissan said its global production fell 28% last month from a year earlier, while sales declined 21%. At Honda, worldwide output fell 30%, the fourth month of consecutive declines.

Other major carmakers, including General Motors and Renault, have also quarterly results hurt by the chip crunch.

Conversely, UK building materials supplier Travis Perkins has raised its profit forecast for the third time in five months, buoyed by pent-up demand, and said it was navigating supply chain and cost inflation challenges "very capably".

Elsewhere, Mastercard reported a 59% surge in third quarter profit to $2.4bn (€2.1bn), with revenue up 29% to $5bn. The better-than-expected performance was boosted by a 52% jump in overseas spending levels.