Audi CEO sees chip scarcity as ‘good storm’ however will get by way of it

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FRANKFURT, Oct 4 (Reuters) – Premium automotive model Audi, Volkswagen’s (VOWG_p.DE) greatest revenue contributor, has to troubleshoot on a day-to-day foundation to deal with an ongoing scarcity of auto chips, its chief govt mentioned.

“We had a very strong first half in 2021. We do expect a much weaker second half. We really have trouble,” Markus Duesmann advised Reuters forward of the Reuters Events Automotive conference, calling the scenario “a perfect storm”.

Duesmann’s feedback spotlight the issues world carmakers are going through in navigating a worldwide chip provide crunch that has hit automotive manufacturing all over the world.

But whereas the automotive business’s car gross sales have suffered it has softened the blow by way of worth will increase which have boosted margins.

Audi in July mentioned it had been unable to construct a mid five-digit variety of automobiles within the first half of the yr. But its revenue margin within the interval surged to 10.7%, even surpassing the 8% in 2019 earlier than the pandemic struck. learn extra

“We are dealing with it pretty well I would say,” Duesmann, who additionally sits on the administration board of Volkswagen, mentioned. He mentioned the group was looking for nearer ties with chipmakers and that the carmaker would emerge stronger from the disaster.

“But at the moment it’s a day-to-day troubleshooting process,” he mentioned.

Audi, which accounted for greater than 1 / 4 of Volkswagen’s first-half working revenue, has launched into an bold shift in direction of battery-powered automobiles, that means all new fashions it would launch from 2026 will probably be totally electrical.

Meantime, manufacturing of inside combustion engines will probably be steadily phased out as much as 2033. Audi’s CFO in August mentioned it might solely take 2-3 years earlier than profitability of electrical automobiles (EV) would match that of combustion engine automobiles.

Duesmann thinks this might occur much more shortly.

“The point where we earn as much money with electric cars as with combustion engine cars is now, or … next year, 2023. They are very even now, the prices,” Duesmann mentioned.

Apart from efforts to problem Tesla (TSLA.O) and develop into the most important vendor of EVs, Volkswagen, the world’s No.2 carmaker, can also be doubling down on efforts to develop software program, which CEO Herbert Diess mentioned is the business’s actual gamechanger. learn extra

Duesmann, who took over as Audi CEO final yr, has beforehand mentioned that Volkswagen would make a lot of the automotive software program wanted for the group’s transformation by itself and that it was too early to consider partnerships. learn extra

“Because at the moment … it would take away speed, it would add complexity,” Duesmann mentioned. “Certainly we could share our software platform with other automotive companies but that’s more mid-term, long-term … 5-10 years.”

Duesmann, a former BMW (BMWG.DE) govt, now additionally has duty for luxurious manufacturers Lamborghini, Ducati and Bentley which have been introduced below the Audi roof.

The 52 year-old Ducati fanatic dismissed recurring hypothesis that considered one of them may very well be offered, despite the fact that there was common exterior curiosity.

“These brands … are very valuable very profitable brands, where we can even expand the synergy level in the future,” Duesmann mentioned. “There are no plans whatsoever to get rid of them.”

Reporting by Christoph Steitz. Editing by Jane Merriman

Markus Duesmann, board member of German luxury carmaker BMW attends the company's annual news conference in Munich, Germany, March 21, 2018.   REUTERS/Michael Dalder