VW's Sales Drop to a 10-Year Low Due to Supply-Chain Issues

Volkswagen AG reported its lowest sales in more than a decade, but said it was confident business would improve this year as supply-chain blockages ease and semiconductors become more easily available. The company said it was seeing positive signs in some of its key markets, and was working to increase production to meet demand.
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Volkswagen Group, which includes passenger-car brands Skoda and Seat, luxury-car maker Audi, and sports-car maker Porsche AG, said Thursday that global sales dropped 7% to 8.3 million vehicles. This was due to supply-chain constraints that shut down some factories in Europe in the wake of Russia’s invasion of Ukraine, as well as Covid-19 measures in China.
VW said that the disruptions were mostly concentrated in the first half of the year, when sales declined by 22%. It said that it was only able to partly offset the lower sales with a 12% increase in sales in the second half, as plants came back online and supply chains began to ease.
The auto industry is still trying to recover from the supply-chain bottlenecks that occurred during the pandemic. With global auto sales still below prepandemic levels, manufacturers are now facing new economic challenges.
On Thursday, VW's shares closed at 128.72 euros, up 0.7%.
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In the face of such challenges, VW's sales last year were the lowest since 2010, when they totaled €7.3 billion. This is equivalent to $7.9 billion.
Porsche, Lamborghini, Bentley, Traton, and VW's truck business were the only brands to see sales growth, while all other brands saw declines in deliveries.
Sales at Porsche rose 2.6% to 309,900 vehicles in the third quarter of 2019. This is according to Volkswagen, who listed Porsche on the stock market in September.
The group of mass-market brands that VW calls its "volume brands" saw a 9% decline in sales in 2020, totaling just over six million vehicles. This includes VW, Skoda, Seat, and VW utility vehicles.
Audi, the company’s luxury brand, sold 1.6 million vehicles last year. This is a 3.9% decrease from the previous year. Unfortunately, this puts them well behind their main rivals, Bayerische Motoren Werke AG and Mercedes-Benz Group AG.
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As we head into the new year, Hildegard Wortmann, VW's sales chief, says the company has a strong backlog of orders for new vehicles to fill. This is good news for the company, and we're looking forward to seeing their continued success in the coming year.
"We're confident that things will improve in 2023, despite the current economic conditions and ongoing supply bottlenecks," she said. She added that she expects supply chains to ease up during the course of the year.
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Sales of vehicles in China fell by nearly 4% last year, to 3.2 million. In Western Europe, its second-largest market, sales fell by 5% to 2.9 million.
In North America, VW sales totaled 842,600 vehicles in 2020, down 7% from 2019. Sales in South America fell 8% to 473,700 vehicles.
Sales in Central and Eastern Europe have declined sharply due to the ongoing conflict in Ukraine. According to VW, sales in the region have dropped by 33% to 441,900 vehicles.
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The company's sales remained flat in its major markets, with the exception of parts of the Asia-Pacific region, where sales rose 8% to 329,500 vehicles.
Volkswagen announced that it sold 572,100 fully electric vehicles worldwide last year, representing a 26% increase from the previous year. The company saw its strongest growth in China, where sales of electric vehicles surged.
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Earlier this week, Mercedes-Benz Group announced that vehicle retail sales fell 1% to two million vehicles. However, sales of fully electric cars rose 124% to 117,800 vehicles.
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BMW reported that global new car sales fell 5% to 2.4 million vehicles in 2019. However, sales of electric models more than doubled to 215,755 vehicles. BMW is a Munich-based luxury-car maker.