Volkswagen warns of further supply chain troubles in 2022

Volkswagen sold two million fewer cars than planned last year due to the semiconductor shortage, it said Tuesday, warning that ongoing supply bottlenecks, high commodity prices and the Russia-Ukraine conflict could hit growth in 2022.

Volatility in commodity markets could continue into 2026, Volkswagen said, exacerbated by Russia’s invasion of Ukraine, which has caused prices of materials key to car production, such as nickel and palladium, to soar.

The Volkswagen Group has a production site in Kaluga as well as sales units and financing companies in Russia, it said, which could be adversely affected by further sanctions on the country. It does not have subsidiaries or equity investments in Ukraine.

Still, business activities of the group in Russia and Ukraine were not significant, it said.

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Volkswagen reported on Friday that it doubled operating profit in 2021 to just under €20 billion 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 per cent in 2021 and boost revenues by 8-13 per cent, it said on Friday, even as it warned of ongoing troubles in the supply chain.

The carmaker reported rising revenue across all major regions in 2021, including in Asia Pacific, where it saw a fall in unit sales.

Both Volkswagen and Toyota have suspended production temporarily at some plants in China due to Covid-related lockdowns, with Toyota warning on Tuesday that the suspensions could last until the end of the month. – Reuters