World No. 2 carmaker Volkswagen warned on Tuesday that semiconductor shortages, supply bottlenecks, high commodity prices and the Russia-Ukraine conflict could hit growth in 2022, as the challenges facing the auto industry mount.
“The war in the Ukraine has put our existing outlook into question,” CEO Herbert Diess said at the German group’s annual press conference following Friday’s 2021 results, warning commodity markets are likely to remain volatile until 2026.
Diess said Volkswagen had become more resilient through the coronavirus pandemic and under normal circumstances would have reason for optimism for 2022.
The group cut overhead costs ahead of schedule last year, leading to 4 billion euros ($4.4 billion) of benefits compared with 2019, said finance chief Arno Antlitz, and sports car brand Porsche’s potential initial public offering (IPO) will provide additional flexibility and value.
Antlitz said Porsche’s IPO could still happen as soon as the fourth quarter of 2022, despite current market uncertainties.
However, Volkswagen sold two million fewer cars than planned last year due to the semiconductor shortage and said on Tuesday that, while the situation should improve steadily throughout this year, there could still be a drag on growth.
It also warned that most commodity costs were likely to rise this year, exacerbated by Russia’s invasion of Ukraine, which has caused prices of materials key to car production, such as nickel and palladium, to soar.
Volkswagen said on Friday its operating profit doubled in 2021 to just under 20 billion euros thanks to higher prices and a more favourable product mix, despite total unit deliveries hitting a 10-year low of 8.9 million.
Looking forward, it expects to increase deliveries by 5-10% in 2022 and boost revenues by 8-13%, it said on Friday.
The group has a production site in Kaluga, Russia, as well as sales units and financing companies in the country, which it said could be hit by further sanctions on Moscow. It does not have subsidiaries or equity investments in Ukraine.
Still, the group’s business activities in Russia and Ukraine are not significant, it added.
Volkswagen reported rising revenue across all major regions in 2021, including in Asia Pacific, where it saw a fall in unit sales. It could have sold significantly more cars in China but for the semiconductor shortage, it said.
Both Volkswagen and Japan’s Toyota have suspended production temporarily at some plants in China due to COVID-related lockdowns, with Toyota warning on Tuesday the suspensions could last until the end of the month.
($1 = 0.9081 euros)
(Reporting by Victoria Waldersee; Editing by Louise Heavens and Mark Potter)
