VW misses expectations on cost pressures, Russia charges

VOLKSWAGEN (VW) missed profit expectations during the third quarter after the carmaker struggled with cost pressures from supply-chain problems and booked one-off charges on its business in Russia and the listing of Porsche.

Operating profit before special items jumped to 4.3 billion euros (S$6 billion) compared with a year ago, Europe’s largest carmaker said on Friday (Oct 28), compared with a forecast of 4.6 billion euros. VW cut its forecast for vehicle deliveries to be on par with last year because of ongoing supply-chain issues, down from a rise of as much as 10 per cent.

“As a result of the structural undersupply of semiconductors, the 2022 financial year will continue to be burdened by supply bottlenecks,” VW said in a statement. “We expect the supply of semiconductors to improve further in the fourth quarter.”

Carmakers are emerging from a period of setbacks dominated by crippling supply-chain woes to contend with a weakening economy. For now, the picture remains uneven with manufacturers working down full order books after months of disrupted production due to semiconductor shortages. But with recession fears mounting, consumer demand has started to slow. Ford Motor earlier this week trimmed its profit forecast for the year because of shortages and higher payments to suppliers.

As the economic outlook darkens, VW joined Ford in a surprise decision this week to cease all activities with US driverless vehicle company Argo AI following multi-billion investments by both partners. The decision will result in a 1.9 billion euros non-cash impairment charge, VW said Friday. The company is continuing autonomous technology development through its Cariad software unit and with partner Robert Bosch. BLOOMBERG