Whirlwind at works meeting: lack of chips causes Volkswagen's profit to drop

Volkswagen has to take a setback in the midst of the transformation and is lowering its sales expectations for the current year.

Due to the ongoing lack of chips, the operating result before special items fell in the third quarter by twelve percent to around 2.8 billion euros.

Analysts had expected a smaller decline according to data from Refinitiv.

Because of the supply bottlenecks and delivery failures for electronic components, the Wolfsburg-based company now has to cut back on deliveries: These would only be at the level of the previous year in the current year, Volkswagen announced on Thursday.

So far, sales had been expected to be noticeably higher than the previous year's level.

In Frankfurt early trading, VW shares lost almost two percent.

Volkswagen nevertheless reaffirmed the return forecast for 2021, which was raised after the record profit in the middle of the year.

Accordingly, the group expects a return of between six and 7.5 percent both before and after special items.

Group sales are expected to be significantly higher than in the previous year.

With its quarterly balance sheet, Europe's largest automaker was still doing comparatively well.

The US rivals Ford and GM had suffered a significantly larger drop in profits.

CEO Herbert Diess called for the transformation to climate-neutral, digital mobility not to slacken: “The results of the third quarter show once again that we now have to consistently push ahead with improving productivity in the volume sector.

We are determined to maintain our strong position against established and new competitors. ”CFO Arno Antlitz added that the semiconductor shortage in the third quarter made it clear that Volkswagen was not yet able to withstand fluctuations in capacity utilization.

Material bottlenecks are still dragging on

In the past few months, Volkswagen had to repeatedly stop the production line and temporarily send employees home due to missing parts. According to the works council, many employees at the main plant in Wolfsburg are insecure and fear about their jobs. During short-time work, the usual surcharges on which many people in the region rely are no longer applicable. In addition to material bottlenecks, which experts believe will drag on until next year, the plant has to cope with the transformation. Wolfsburg is one of the few VW plants that has not yet been awarded a contract to build a high-volume electric car that could ensure sufficient capacity utilization.

Statements by CEO Herbert Diess, who sees up to 30,000 jobs in Germany at risk if the conversion of Volkswagen into a leading manufacturer of e-cars and software-based services that he is pushing for, did not succeed, had recently caused additional unrest.

Not to America now

After clear criticism from the works council, Diess has now announced its participation in the works meeting in Wolfsburg at the beginning of November.

A trip to the USA that was actually planned for next week has been canceled, as a company spokesman confirmed on Wednesday upon request.

The new works council chairman Daniela Cavallo had previously publicly criticized the CEO's absence from the company meeting.

CEO Diess will be in Wolfsburg on November 4th and answer questions from employees, said the company spokesman. A dialogue event planned for Thursday was canceled at short notice. Cavallo had previously criticized the cancellation and his own appointment with clear words: "Herbert Diess prefers investors on Wall Street to his own workforce." This behavior is unprecedented in the history of the group and shows that Diess has no empathy even in this crisis still have a feel for the situation of the workforce. “This provocation shows us that Dr. Diess still has no interest in constructive cooperation. "

The works council in Wolfsburg is alarmed because the VW main plant is underutilized.

There could be as little production here in 2021 as it was last in the late 1950s.

The employee representatives have long been asking for another electric model in addition to the “Trinity” project, which is to come from 2026 - later than initially planned.