CEO Herbert Diess told CNN Business on Thursday that the world’s second largest automaker has “seen the worst” of a chip shortage that badly dented its third quarter earnings.
“We had really a challenging quarter,” Diess told Anna Stewart during an interview. “We have better [chip] supply now and hopefully months after months we can increase.”
The German company, which owns multiple brands, including Audi and Skoda, said that operating profit fell 12.1% from the same period last year to €2.8 billion ($3.3 billion). Deliveries dropped 24% to 1.97 million units.
Volkswagen (VLKAF) said in a statement that the chip crunch had “disproportionately affected” its business in China.
A severe shortage of semiconductors — tiny computer chips used to make vital components of vehicles, including driver assistance systems — has delayed automotive production and forced some plants to shut down.
The supply of vehicles failed to keep pace this year as countries emerged from pandemic lockdowns and consumer demand surged, pushing new and used car prices to new heights.
Consulting firm AlixPartners forecasts that the lack of chips, coupled with a raft of other raw material shortages, will cost the automotive industry $210 billion this year, and cut vehicle production by 7.7 million units.
Stellantis, formed by last year’s merger of Fiat Chrysler and French automaker PSA Group, said Thursday that the chip shortage led to a 30% loss of planned production last quarter, or about 600,000 vehicles.
Diess said that Volkswagen’s supply chain bottlenecks would ease in the coming months, with improvements expected “quarter over quarter” in 2022. He said the company has been “stockpiling” and was working to make its supply chains more “robust and resilient.”
Diess said that electric vehicle sales doubled compared to last year, and that some Volkswagen brands would be launching new electric models in the coming weeks.
“Hopefully we can catch up with Tesla (TSLA),” he said.