Semiconductor shortages hit Europe’s car giants

Two of Europe’s biggest car makers have warned that a global shortage of semiconductors is hitting vehicle production. 

Profits at Volkswagen tumbled 12.1 per cent to £2.4billion in the third quarter of the year as a lack of the powerful computer chips caused deliveries of new cars to stall. 

As a result of the ‘challenging’ market conditions, the German giant expects car deliveries for 2021 to be in line with the previous year, having previously expected an increase. 

Driving force: Profits at Volkswagen tumbled 12.1 per cent to £2.4billion in the third quarter of the year

VW is not the only car maker suffering. Stellantis, the owner of brands including Alfa Romeo, Citroen, Fiat and Vauxhall, posted a 30 per cent drop in production in the third quarter, equivalent to around 600,000 cars, as a result of unfilled orders for semiconductors. 

The lower amount of cars rolling off its production line saw revenues slump 14 per cent to £27.5billion, with Stellantis finance chief Richard Palmer noting ‘poor visibility of component supply’ across the rest of the year, suggesting the shortages could continue. 

Semiconductors are used in power steering systems as well as backup cameras and emergency braking systems. They are also used in other electronics including computers and mobile phones.  

The chips have been in short supply this year due to a cocktail of pressures including factory shutdowns during the pandemic, demand for electronics used in home working and the spiralling cost of shipping. 

The supply crunch has forced car makers to cut production, causing prices of both new and pre-owned vehicles to rise. 

The issue was flagged earlier this week by electric car maker Tesla, which said the semiconductor shortage alongside congestion at ports and power outages had been affecting its ability to keep running its factories at full speed.