Business Maverick

Business Maverick

VW Jumps as It Sees Better Chip Supplies Fueling Sales Surge

VW Jumps as It Sees Better Chip Supplies Fueling Sales Surge
Employee conducts quality control checks on a Volkswagen AG (VW) ID.5 electric sports utility vehicle (eSUV) on the assembly line at the automaker's electric automobile plant in Zwickau, Germany, on Tuesday, April 26, 2022. The Zwickau assembly lines are the centerpiece of a plan by VW, the world's biggest automaker, to manufacture as many as 330,000 cars annually.

Volkswagen AG expects to sidestep a slowing economy with a jump in sales this year as Europe’s biggest carmaker benefits from full order books and better access to semiconductors.

VW is projecting revenue to climb as much as 15% on the back of a similar increase in vehicle deliveries. The company sees operating returns as high as 8.5% — roughly on par with last year’s result, but better than analysts expected. The shares jumped the most since last March.

“We expect the supply chain bottlenecks to gradually ease in the current year, allowing us to service the high order backlog,” Chief Financial Officer Arno Antlitz said in a statement Friday.

Mercedes-Benz AG, Renault SA and Stellantis NV reported healthy profits in the past weeks on high prices and orders they accumulated during the height of the supply-chain crisis. The strong results come amid concerns over waning demand later this year as record inflation and slowing economies increasingly squeeze car buyers.

VW shares soared as much as 10.2%, the steepest intraday gain since March 9, 2022. They’re up roughly a fifth this year.

VW Sees Another Healthy Sales Gain | Carmaker expects third straight revenue increase

VW is working through a number of hurdles in the shift to electric cars, which accounted for 7% of group deliveries last year. Chief Executive Officer Oliver Blume, in the top spot since September, is under pressure to revamp the company’s software push and defend VW’s position in its biggest market China against home-grown manufacturers.

Read more: VW Sees €3.6 Billion Cash Gap as Logistics Woes Cause Glut

The German company proposed a dividend of €8.70 per ordinary share and €8.76 per preferred share, a €1.20-per share increase over last year’s payout.

While returns are strong for now, carmakers continue to battle supply-chain snarls. Thousands of unsold vehicles and unused raw materials have been piling up at plants in Europe because of truck and train shortages. The problems, following chip shortages that are finally easing, have prompted Stellantis and Renault to try and recruit truck drivers among their factory workers.

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