Volkswagen may need additional production cut as chip shortage weighs

Volkswagen AG (VOWG) said on Thursday that it might need to reduce production further because of a global semiconductor shortage.

“We currently expect supply of chips in the third quarter to be very volatile and tight,” the German auto maker was quoted as saying by Reuters.

“We can’t rule out further changes to production.”

The company also said that it expected an improvement in the chip supply situation by the end of this year and that it sought to compensate production shortfalls during the second half to the best of its abilities.

The announcement came after the Nikkei business daily reported that Volkswagen’s rival, Toyota, would reduce global production in September by 40% compared to its prior plan.

It also followed news that German chipmaker Infineon had been forced to suspend production at one of its Malaysia-based facilities in June as a result of a new COVID-19 outbreak.

Infineon Chief Executive Reinhard Ploss said earlier in August that the automotive sector was faced with “acute supply limitations across the entire value chain,” while supply and demand would probably be brought into balance well into 2022.

As of 8:01 GMT on Friday the shares of Volkswagen AG were retreating 0.74% (EUR 2.10) on the day, while extending a loss from Thursday, to trade at EUR 279.80 in Frankfurt.