BERLIN—

Volkswagen AG

VOW -0.22%

, one of many world’s largest auto makers, expects inflation to ease later this 12 months however warned there can be no important enchancment within the international semiconductor scarcity that has induced many automobile makers to slash output as they attempt to discover chips.

The outlook comes because the automotive business is ramping up manufacturing of electrical autos that require uncooked supplies and an array of semiconductors to manage a automotive’s core programs and infotainment elements, and join them to the web. The pc-chip scarcity has left many automobile makers unable to satisfy shopper demand for brand new vehicles, limiting their means to develop and pushing up the worth of latest and used autos.

Arno Antlitz,

VW’s chief monetary officer, informed The Wall Road Journal on Monday that the corporate was well-hedged towards inflation. The value of lots of the uncooked supplies and components that automotive makers want rose considerably final 12 months, however so did automotive costs.

Mr. Antlitz stated Volkswagen had mitigated the impression of raw-material and part worth will increase by means of rigorous cost-cutting and that greater costs weren’t but translating into greater wages on the firm. He stated he anticipated the speed of inflation would ease later this 12 months, however added that the corporate would proceed to wrestle with a decent provide of chips all year long.

“We don’t see important strain on wages,” he stated. “At the moment, the excessive inflation we see will probably be non permanent. The power to develop in 2022 will probably be primarily based on the power to get extra chips.”

In response to greater prices and demand for brand new autos outpacing provide, auto makers and sellers raised costs for brand new and used autos and supplied fewer reductions and money incentives to lure patrons.

The upper automotive costs have boosted auto makers’ earnings and will nicely be a function that’s right here to remain even after the chip scarcity ends and inflation eases, Mr. Antlitz stated.

“As a result of scarcity of vehicles total, we’ve got higher margins and fewer incentives [for customers]. Total, we count on fairly a very good 12 months for VW,” he stated.

Electrical autos at a VW plant in Zwickau, Germany, had been prepared for supply final 12 months.



Photograph:

Jan Woitas/Zuma Press

Mr. Antlitz, who grew to become Volkswagen’s chief monetary officer final 12 months, stated there was a structural undersupply of chips that’s prone to final all year long, regardless of the corporate’s efforts to offer precedence to chips for its most worthwhile autos and develop direct relationships with chip producers far down the provision chain.

Some automotive makers, corresponding to

Tesla Inc.,

TSLA 1.99%

have fared higher throughout the chip disaster. Tesla tailored to the dearth of semiconductors utilized by the auto business by rewriting software program to permit its vehicles to make use of chips extra extensively accessible.

“We may return to ranges we noticed in 2019 in 2023,” Mr. Antlitz stated. “We’re doing related efforts like Tesla, however our mannequin vary is far greater and extra advanced.”

After initially anticipating chip provide to get better in 2021, a number of auto makers have warned for months that the regular rise in demand for chips from auto makers, consumer-electronics firms and different producers was prone to lengthen the chip squeeze into 2022.

Within the U.S., Volkswagen grew to become worthwhile in 2021 for the primary time in years, posting its strongest gross sales development in practically a decade.

Volkswagen is investing in electrical autos greater than different legacy automotive makers within the U.S. WSJ goes inside an engine manufacturing unit that’s being remodeled right into a battery plant because the German auto maker appears to be like to vary its picture and turn out to be a rival to Tesla. Photograph illustration: George Downs

Volkswagen is pushing to construct up its electric-vehicle enterprise world wide, and the autos may current the corporate with a possibility for development within the U.S. market, Mr. Antlitz stated.

Total, the auto maker is a distinct segment competitor within the U.S., however within the electric-vehicle market Volkswagen is rising quicker and has grabbed a bigger share of gross sales than it has been in a position to do up to now with standard internal-combustion-engine, or

ICE,

autos.

“Now we have 7.5% EV market share within the U.S., double our ICE market share and No. 2 behind Tesla,” Mr. Antlitz stated.

Volkswagen manufacturers that embrace Porsche and Audi are planning to roll out eight new battery electrical autos within the U.S. this 12 months. The VW model goals for totally electrical autos to account for 50% of its automobile gross sales within the U.S. by 2030, Mr. Antlitz stated.

Write to William Boston at [email protected] and Nina Trentmann at [email protected]

How the International Chip Scarcity Impacts You

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