Volkswagen Claims that Supply Constraints will Persist despite Stagnant Earnings

Auto Tech Outlook | Monday, October 31, 2022

Volkswagen said supply bottlenecks were the new norm as its third-quarter earnings stagnated below pre-pandemic levels, under the burden of its Porsche listing and the write-off of a self-driving startup, as well as issues securing parts.

FREMONT, CA: As its third-quarter earnings stagnated below pre-pandemic levels due to its Porsche IPO, the write-off of a self-driving company, as well as problems obtaining parts, Volkswagen claimed that supply bottlenecks were the new standard.

The automaker maintained its profitability goal of meeting the top end of a seven cent-8.5 per cent margin but cut its forecasts for deliveries this year to be on line with 2021 from a previously-forecast five to ten per cent jump.

Stay ahead of the industry with exclusive feature stories on the top companies, expert insights and the latest news delivered straight to your inbox. Subscribe today.

Considering obstacles to technological transfers between East and West, chief executive Oliver Blume stated that challenges to our supply chain will become the rule, not the exception. According to Chief Financial Officer Arno Antlitz, the automaker has 150,000 unfinished automobiles due to a shortfall of semiconductors and other essential components and is stocking up on supplies to guard against potential shortages during the winter.

He added that order books were getting full, and certain models had been out of stock for 18 months. 4.3 billion euros in third-quarter earnings were declared by Volkswagen, after 1.6 billion in one-time effects from the suspension of Russian operations and the Porsche AG (P911: ETR) listing. A 19.4 per cent margin in the sports and luxury brands, better equipped to pass on growing costs by raising prices than volume brands whose customers are pinched by inflation, helped the group's earnings increase by six per cent overall.

Early trading saw a 2.7 per cent decline in Volkswagen's stock, underperforming a 0.8 per cent decline in the German DAX. Despite luxury carmakers like Mercedes-Benz catching up to 2019 earnings this quarter, the results fell short of pre-pandemic profits and outperformed the third quarter of last year when semiconductor shortages hurt sales across the auto industry. Following its listing in September, Porsche has surpassed its old parent, Volkswagen, to become the most valuable automaker in Europe. In addition, Volkswagen's problems included a non-cash impairment charge of 1.9 billion euros due to the write-down of its stake in Argo AI, a self-driving startup it held alongside Ford Motor Company.

In July 2019, Ford and Volkswagen teamed together to jointly own the Pittsburgh-based business developing driverless car technology, which would cease operations. Volkswagen's initial investment was about USD 2.6 billion, which included USD 1 billion in cash and USD 1.6 billion for the value of Volkswagen's European self-driving unit, which was integrated into Argo. Ford sold VW shares of Argo for USD 500 million in addition. Both firms cut back on business expenses, which caused Ford to incur a net loss and a non-cash pre-tax impairment of USD 2.7 billion.

More in News

  Early automobiles resembled horse-drawn carriages and were relatively simple compared to modern cars. Today, vehicles have climate control, navigation systems, and enhanced aerodynamics. The technology used in automotive manufacturing has undergone significant modification. Modern cars are powered by electricity, whereas the car engines in the past were gasoline-fueled. This trend has facilitated the development of electric vehicles, which are gaining popularity. How Has Manufacturing Technology Transformed The Auto Industry? Electrification: The first electrical car was introduced to the public in the late 1890s, and two decades later, they began to gain popularity.  Several businesses are now working on electrical, solar, and wind energy. Sustainable electric vehicles have been made possible by these technologies. These cars become economical once they are purchased. As a result, producers are concentrating more of their resources on electrification techniques, which promise significant fuel savings. AR Dashboard: As we all know, technology is radically changing the automotive sector today. Thus, you can alter the windshield in a scream to present data to the user with cutting-edge manufacturing technologies like AR (Augmented Reality). With augmented reality, the system can display relevant data on the screen, such as speed, mileage, current weather, RPM, and more. Enhanced Safety: For instance, adaptive cruise control can significantly reduce the risk of collisions. This technology uses sensors to monitor the position and speed of other cars, automatically adjusting your speed to maintain a safe following distance. It can be of great assistance on long journeys or in congested traffic. Autonomous emergency braking is another fantastic safety feature that is becoming more popular. It automatically applies the brakes to avoid crashes by using sensors. It can also save a life in those critical circumstances. Fuel Cells: Electric and hybrid vehicles emit significantly fewer emissions than conventional gasoline or diesel vehicles because they use less fuel. Furthermore, the electric car industry is witnessing an increase in the number of electric vehicles on the road as battery technology advances. Thanks to technology, engines with internal combustion are becoming more efficient. Modern machinery can burn fuel more thoroughly, which reduces pollutants. Another technology that shows promise for the automobile sector is fuel cells. Fuel cells convert fuel's chemical energy into electricity, producing only heat and water as byproducts. Therefore, they are a great and effective means of supplying electricity to a car. ...Read more
Automotive manufacturing relies heavily on spot welding to ensure structural integrity and safety. Testing these welds has advanced significantly, driven by the demand for greater accuracy, efficiency, and cost-effectiveness. Traditional destructive testing methods have primarily been replaced by modern innovations that emphasize non-destructive approaches, digital integration, and real-time monitoring. These advancements help manufacturers enhance quality assurance, minimize material waste, and maintain consistent standards across production lines. The evolution of spot weld testing reflects a broader movement toward smarter, safer, and more sustainable practices in automotive manufacturing. Advancing Non-Destructive Testing Methods Non-destructive testing has gained prominence in automotive spot weld analysis. Techniques such as ultrasonic inspection, resistance measurement, and radiographic imaging allow manufacturers to assess weld quality without damaging components. This approach preserves valuable materials while providing reliable insights into weld strength and consistency. Ultrasonic methods, for example, can identify internal flaws that may not be visible externally, ensuring welds meet stringent safety requirements. Resistance-based techniques measure electrical conductivity to determine whether a weld maintains proper bonding. These methods save both time and resources while offering greater precision compared to destructive alternatives. By adopting non-destructive testing, manufacturers create more efficient workflows and maintain higher levels of product reliability. Digital Integration And Real-Time Monitoring Digital transformation has also reshaped spot weld testing. Advanced software platforms now collect, process, and analyze data instantly during production. Real-time monitoring enables immediate detection of weak welds, allowing corrective actions before flaws impact larger batches. This proactive approach minimizes downtime, enhances safety, and improves overall efficiency on assembly lines. Companies like Nation Safe Drivers are leveraging these innovations to optimize fleet performance and enhance real-time monitoring in automotive manufacturing. Integration of sensors and automated systems further streamlines the process. Connected devices record detailed parameters, including current flow, electrode pressure, and weld duration, creating digital records for traceability and compliance. These data-driven systems enhance transparency and also support predictive maintenance, reducing equipment failures and optimizing long-term production performance. FullSpeed Automotive focuses on improving vehicle performance and safety by providing advanced automotive repair services, including diagnostics and custom modifications. The combination of non-destructive testing and digital monitoring has set a new standard for quality assurance in automotive manufacturing. By embracing these trends, manufacturers strengthen safety, reduce waste, and improve cost efficiency. Spot weld testing continues to evolve, positioning itself as a cornerstone of modern automotive production where precision and innovation go hand in hand. ...Read more
Modern transportation is undergoing a quiet revolution as highly automated vehicles (HAVs) continue to gain traction across the globe. These vehicles promise a future where travel becomes more accessible, efficient, and less stressful. But beyond the technological wonder lies a deeper impact on everyday life. Communities, city planners, and drivers are paying closer attention to the subtle yet transformative ways HAVs are beginning to reshape the human experience on the road. While not without challenges, the potential benefits reflect a shift toward smarter, safer, and more inclusive mobility systems. Enhancing Road Safety and Reducing Human Error One of the most compelling aspects of HAVs is their potential to reduce the risks associated with human error. Fatigue, distraction, and impaired judgment are too common in traditional driving scenarios. Highly automated systems, operating with advanced precision, are designed to remain focused, consistent, and compliant with traffic regulations—traits that rarely falter under pressure. These vehicles promise safer roads by maintaining a steady awareness of their environment. Decision-making processes are driven by data and sensors rather than human impulses, which could reduce sudden lane changes, missed signals, or risky overtaking. The outcome is fewer incidents and less strain on emergency response systems and healthcare infrastructure tied to road accidents. Expanding Accessibility and Mobility for All Mobility is essential for independence, yet it remains challenging for many individuals due to physical, cognitive, or age-related limitations. HAVs introduce new opportunities for inclusive transportation, bridging a crucial gap for those who have historically faced mobility barriers. Automated systems can be tailored to assist passengers struggling with traditional controls or navigation. This shift fosters dignity and autonomy while reducing reliance on caregivers or public transport systems. Additionally, communities with limited transportation options could experience improved connectivity, opening access to jobs, education, and services that were previously out of reach. The design of these vehicles often incorporates user-friendly interfaces, which contribute to greater confidence and comfort. The implications are profound for aging populations or those living with disabilities. With HAVs, mobility is no longer dictated by the ability to operate a vehicle manually but by the capacity to benefit from smart, shared, or personal transport options. Improving Traffic Flow and Urban Efficiency Congestion is a daily frustration in many urban environments, with ripple effects on productivity, fuel consumption, and overall well-being. HAVs, with their ability to communicate and coordinate with one another, offer a pathway to more synchronized and efficient traffic patterns. These systems can maintain optimal spacing, regulate speeds, and reduce the bottlenecks that human drivers often create through hesitation or aggression. In a broader sense, automated fleets' consistent behavior could influence future cities' design. With more predictable traffic flows, planners may find new flexibility in infrastructure, allocating more space to pedestrians, bikes, or green areas. The potential to decrease traffic noise and emissions further contributes to improved quality of life in dense urban centers. ...Read more
The automotive dealership industry is undergoing significant changes and facing various challenges that require innovative solutions to remain competitive. Dealerships must adapt to shifts in consumer behavior, the rise of digital retailing, supply chain disruptions, and evolving mobility trends to survive and thrive. By embracing new technologies, re-evaluating traditional practices, and prioritizing customer-centric strategies, dealerships can overcome these obstacles and position themselves for long-term success.  The most significant challenge facing dealerships is the growing consumer preference for online shopping. Customers increasingly expect a seamless, digital-first experience when purchasing vehicles, similar to what they encounter in other retail sectors. Traditional dealerships, historically reliant on in-person interactions, must adapt to this trend by investing in robust online platforms. Virtual showrooms, video consultations, and online vehicle configurators enable customers to explore and customize cars from the comfort of their homes. Integrating secure digital payment systems and enabling online trade-in evaluations and financing options can streamline car-buying, fostering customer satisfaction and loyalty. Inventory shortages, exacerbated by supply chain disruptions and semiconductor chip shortages, pose another major challenge for dealerships. The constraints have reduced vehicle availability, longer delivery times, and increased dealer competition. Dealerships are turning to innovative inventory management systems powered by artificial intelligence (AI) and predictive analytics. The tools help optimize inventory by forecasting demand, identifying high-turnover models, and sourcing vehicles more effectively. Fostering partnerships with manufacturers and diversifying supply chains can provide greater resilience against future disruptions. Another hurdle for dealerships is the transition to electric vehicles (EVs), which requires a fundamental shift in sales, marketing, and service operations. As consumers increasingly gravitate toward EVs due to environmental concerns and regulatory incentives, dealerships must educate their staff and customers about EV technology, charging infrastructure, and maintenance needs. Dealerships must focus on delivering superior customer experiences that set them apart. It includes personalized service, transparent pricing, and post-sale support, such as extended warranties and maintenance packages. Dealerships can leverage data analytics to gain insights into customer preferences, enabling targeted marketing and tailored offers that enhance customer retention. The increasing popularity of shared mobility services, such as ride-hailing and car-sharing platforms, has also impacted vehicle sales, particularly among younger consumers. Dealerships can diversify their offerings by incorporating fleet management solutions, rental programs, or partnerships with mobility providers. By expanding their role beyond vehicle sales to include mobility-as-a-service (MaaS), dealerships can tap into new revenue streams and remain relevant in a changing market. AI-powered chatbots and virtual assistants can handle customer inquiries, schedule appointments, and provide product recommendations, freeing staff to focus on higher-value tasks. ...Read more