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Premium vehicles elevate Volkswagen’s margins regardless of chip woes By Reuters 

© Reuters. FILE PHOTO: A Volkswagen emblem is seen because it launches its ID.6 and ID.6 CROZZ SUV at a world premiere forward of the Shanghai Auto Present, in Shanghai, China April 18, 2021. REUTERS/Aly Music

By Christoph Steitz and Jan Schwartz

FRANKFURT (Reuters) – Volkswagen (DE:) raised its working margin goal for this yr after sturdy demand for worthwhile Audis and Porsches within the first quarter, however warned it remained in “disaster mode” over a worldwide scarcity of semiconductor chips.

Europe’s greatest carmaker mentioned on Thursday it now anticipated an working revenue margin of 5.5-7% this yr, versus a earlier forecast of 5.0-6.5%, with automobile deliveries and gross sales each up by greater than a fifth.

The higher steerage is principally pushed by improved demand for high-margin premium vehicles, a pattern additionally seen at Basic Motors (NYSE:), Daimler (OTC:), Ford and Stellantis.

That helped the group cushion the influence of a scarcity of automotive chips, which it warned would intensify within the second quarter.

Chief Govt Herbert Diess mentioned the issue had minimize manufacturing by round 100,000 vehicles within the first quarter, and there was extra to return.

“We’re nonetheless tasking our provide chain individuals to get well the losses of quarter two, which we anticipate,” he mentioned.

Volkswagen shares had been flat.

To attempt to safe provides over the longer-term, the German group is speaking on to chipmakers together with NXP Semiconductors (NASDAQ:) and Infineon (OTC:), in addition to foundries equivalent to Taiwan Semiconductor Manufacturing Co, Diess mentioned.

“We’re, for certain, in disaster mode,” he mentioned.

Throughout the first quarter, deliveries of Porsches and Audis each rose a few third yr on yr, Volkswagen has mentioned. Gross sales of electrical automobiles greater than doubled to 133,300 automobiles.

The world’s second largest carmaker by automobile gross sales cheered traders earlier this yr when it supplied extra element about its electrical automobile technique, together with greater gross sales targets and plans to construct six battery factories in Europe.

Volkswagen’s working revenue got here in at 4.8 billion euros ($5.8 billion) in January-March, helped by value cuts and better gross sales, versus 900 million euros in the identical interval final yr, which was hit by the COVID-19 pandemic.

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