Audi CEO sees chip shortage as ‘perfect storm’ but will get through it

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FRANKFURT, Oct 4 (Businesshala) – Premium car brand Audi, Volkswagen’s (VOWG_p.DE) biggest profit contributor, is tackling the ongoing shortage of auto chips to troubleshoot on a day-to-day basis, its chief executive said. .

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“We had a very strong first half in 2021. We expect a very weak second half. We really have trouble,” Marcus Duesmann told Businesshala. Businesshala Event Automotive Conference, calling the situation “a perfect storm”.

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Duismann’s comments highlight the problems that global carmakers are facing in dealing with the global chip supply crisis that has affected car production around the world.

But while the car industry’s vehicle sales have been impacted, the setback has been mitigated by price hikes, leading to higher margins.

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Audi said in July that it was unable to manufacture mid-five-digit cars in the first half of the year. But its profit margin rose to 10.7% in this period, even surpassing 8% in 2019 before the pandemic struck.

“We are dealing with it very well, I would say,” said Duesmann, who also sits on Volkswagen’s management board. He said the group was seeking closer ties with chip makers and that the carmaker would emerge stronger from the crisis.

“But at the moment it is a day-to-day troubleshooting process,” he said.

Audi, which accounts for more than a quarter of Volkswagen’s first-half operating profit, has embarked on an ambitious shift toward battery-powered vehicles, meaning all new models to be released from 2026 will be fully powered. Will be electric.

Meanwhile, production of internal combustion engines will be phased out gradually by 2033. Audi’s CFO in August said it would take only 2-3 years for the profitability of electric vehicles (EVs) to match that of combustion engine cars.

Duesman thinks it can happen even faster.

“The point where we make as much money with combustion engine cars as with electric cars is now, or … next year, 2023. Those are still very, very prices,” Duesman said.

In addition to trying to challenge Tesla (TSLA.O) and become the biggest seller of EVs, Volkswagen, the world’s No. 2 carmaker, is also doubling down on efforts to develop software, which CEO Herbert Diess described as the industry’s true driving force. It’s called a gamechanger.

Duesmann, who took over as Audi’s CEO last year, previously said that Volkswagen would build most of the automotive software needed for the group’s transformation on its own and that it was too early to think of a partnership.

“Because at the moment … it will take the momentum away, it will add complexity,” Duismann said. “Certainly we can share our software platform with other automotive companies, but it’s more mid-term, long-term … 5-10 years.”

Duesman, a former BMW (BMWG.DE) executive, now also has responsibility for luxury brands Lamborghini, Ducati and Bentley, which have been brought under the Audi roof.

The 52-year-old Ducati enthusiast dismissed recurring speculation that one of them might be sold, even though there was regular outside interest.

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

Reporting by Christoph Steitz. Editing by Jane Merriman

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