Europe’s biggest automakers—Volkswagen and Stellantis—has joined U.S. competitors in voicing optimism that the severe semiconductor shortage decimating production might have peaked.
Both carmakers said they had moved past the worst of the availability issues that have snarled production lines globally. Supply of the components is likely to improve “quarter after quarter” into next year, VW chief executive Herbert Diess said in an interview with Bloomberg Television.
Since the delivery woes on semiconductors emerged late last year, executives regularly made upbeat comments that supplies would quickly return to normal. It hasn’t panned out this way. Factory fires, winter storms and renewed coronavirus outbreaks restricting chip factory operations have instead made a dire situation worse and wait times have stretched even longer.
The auto executives’ views Thursday contrasted with those of Samsung Electronics. The major producer and consumer of chips for computers and mobile devices said it expects the tight supply that’s hurting industries worldwide to persist through next year. Telecommunication network equipment maker Nokia also said it struggled to make an assessment on how supply would develop next year.
Carmakers were more upbeat. General Motors CEO Mary Barra told Bloomberg Television on Wednesday she’s optimistic the carmaker is “through the worst of it,” while Ford Motor Co. said the protracted shortage has already eased with further improvements expected through next year.
As the constraints drags on, Volkswagen’s order backlog is likely to balloon to about half a million vehicles by the end of the year, according to Diess. He expects “some constraints” on chip availability to remain into 2022, he said.
Volkswagen share fell 3.4% while Stellantis declined 0.4%.
The German company as well as Stellantis still stuck to key forecasts, even as the unprecedented supply issues prompted VW to cut delivery and revenue expectations. VW now anticipates revenue growth of as much as 10% instead of as much as 15% previously, Chief Financial Officer Arno Antlitz said.
Stellantis warned that its production loss in 2021 will likely be higher than projected. Full-year revenue could come in lower than 150 billion euros due to the chip issue, CFO Richard Palmer said on an analyst call. This won’t significantly impact the automaker’s ability to maintain margins, he said.
The chip crunch took a heavy toll on both companies during the third quarter. Volkswagen’s operating profit before special items fell 12%, to 2.8 billion euros ($3.2 billion), during the period, below even last year, when pandemic-related restrictions weighed on sales. At Stellantis, revenue declined 14% after the company lost output of around 600,000 cars.
Carmakers have navigated the chip crisis by focusing production on its most lucrative models to keep up returns. Profit at VW’s Porsche and Audi luxury brands has jumped, offsetting losses at it five mass-market nameplates.
Sustaining cash flows is vital to bolster the industry’s most ambitious electric-car rollout plan and stand a chance of closing in on Tesla Inc.
“The visibility on semiconductors continues to be a difficult subject for the industry and for us,” Palmer said on a separate call. “We’re cautiously optimistic into the fourth quarter.”
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