On October 28, Volkswagen reported a drop in its operating profits for Q3 of 2021.
The German carmaker said that its operating profit before special items in the third quarter is down by 12.1 percent to €2.8 billion, or equivalent to about $3.2 billion, compared to the same period last year, which was also marked by weak sales due to the pandemic.
In a statement published on Thursday, the company also revealed that its operating return on sales dropped from 5.4 percent to 4.9 percent.
Lackluster profit caused by a shortage of semiconductors
The firm attributed the decline in profits to the global shortage of semiconductors. These materials are in automotive electronics, but their use in a number of other widely-used items, including game consoles, webcams and tablets, left chip makers unable to catch up with the rising demand, impacting the car industry.
Volkswagen said that despite the strong demand for its cars in China, its business there was negatively affected by the limited supply of a component in its cars. China is the group’s largest single market and the semiconductor bottlenecks reduced the company’s share in this market.
As a result of the semiconductor shortage, the Group said it is now lowering its delivery forecast, anticipating them to be in line with the deliveries in 2021.
New auto strategy
Arno Antlitz, CFO of Volkswagen Group, acknowledged the firm’s shortcomings that resulted in the lackluster sales.
“Following a record result in the first half of the year, the semiconductor bottlenecks in the third quarter made it abundantly clear to us that we are not yet resilient enough to fluctuations in capacity utilization,” he said in the statement.<…>This clearly shows that we must continue to work resolutely on improving our cost structures and productivity in all areas. In order to be able to implement our NEW AUTO strategy as planned and finance our transformation towards e-mobility and digitalization on our own, we need to make decisive improvements.”
The firm’s CEO, Herbert Diess, assured, though, that the company is determined to maintain its strong position in the industry with the new auto strategy.