German Manager Magazin: Volkswagen: Sales are falling in China of all places000952

The brands of Volkswagen-Group delivered almost five million vehicles worldwide between January and June. That was 28 percent more than in the first half of 2020, the group announced on Friday. At that time, during the peak of the first corona wave, the temporary closings of plants and dealers as well as the collapse in demand hit the automotive industry hard. Volkswagen had key data for the first half of the year published a week ago.

In the home market of Western Europe, Wolfsburg’s sales rose by almost 31 percent, while Volkswagen reported a half-year plus of 45 percent for North America, as well as for the South American countries. In China, sales rose by 16 percent – but of all things, there is cause for concern in the Group’s most important sales market: while the first three months of the year went very well with an increase of 61 percent, the group brands in China sold 12 percent between April and June fewer vehicles.

VW group brands have recently fallen significantly behind in China

The reason for the decline in the second quarter is the chip crisis. The group had already announced last week that the shortage of semiconductors would lead to further impairments. In the past few months, Volkswagen – like other car manufacturers – has had to stop the production lines in some plants several times due to a lack of electronic components and put employees on short-time work. Now the group has increasing problems with the locations in Southeast Asia.

Volkswagen’s China boss Stephan Wöllenstein spoke of a “particularly challenging year” for the world’s most important car market. Wöllenstein hopes that the problems will be largely overcome in the course of the second half of the year: “While the chip shortage has temporarily affected our sales development in the last few months, we do not expect any long-term effects.”

There are different assumptions as to when the chip crisis in the auto industry will ease. Because of the slack sales in mid-2020, many automakers canceled large chip orders, and many semiconductor manufacturers then relocated their production to other industries. This is now taking revenge on the auto companies with the increase in demand.

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