Missing computer chips Short-time work at VW and Daimler

Status: 16.06.2021 10:23 a.m.

Time and again, the production lines in car plants stand still – the manufacturers refer to the industry-wide shortage of chips. Now it hits Volkswagen and Daimler again. When will the situation improve? From Angela Göpfert, tagesschau.de There will be stoppages in the coming week at the VW main plant. In the Tiguan, Touran and Tarraco production as well as in the Golf production in the late and night shifts, the Wolfsburg switch to short-time work. In the Daimler plants in Bremen and Rastatt, short-time work is already the order of the day. The reason is once again the industry-wide shortage of chips.

06/08/2021

Interruptions cost billions

It is nowhere near the first time that the shortage of semiconductors has slowed automakers’ production. It was not until the end of May that the VW luxury subsidiary Audi at the Ingolstadt and Neckarsulm locations suffered production interruptions. BMW had been hit a few weeks earlier. The Ford plant in Cologne is also affected. The German auto industry is not alone with its problems: The US auto giant Ford calculates charges of around 2.5 billion dollars this year due to the lack of chips. The problems in the automotive industry have consequences for the entire economy. Just today, the researchers at the Munich Ifo Institute lowered their forecast for the growth of the German gross domestic product this year from 3.7 to 3.3 percent. To justify this, they also referred to bottlenecks in the delivery of intermediate products such as semiconductors.

Improvement in the third quarter?

It could take a few more weeks for a change for the better. According to experts, the automotive industry is heading for the lowest point. “We are facing the toughest six weeks,” said Murat Aksel, VW Board Member for Purchasing, recently in an interview with the “Handelsblatt”. The situation should improve again in the third quarter. Competitor Daimler also expects an improvement in the second half of the year. The Boston Consulting Group (BCG) also estimates that the situation should ease from July.

Around four million cars less

Because of the lack of chips, automakers worldwide produced 1.4 million fewer cars in the first quarter and 1.6 million in the second quarter, the BCG experts calculate. For the entire year 2021, the failures are likely to amount to four to six million vehicles.

05/04/2021

The consulting firm Alix Partners in Munich estimates 3.9 million cars. This corresponds to a value of non-produced cars of around 91 billion euros.

Lessons from the shortage of chips

The car manufacturers have long since learned their lessons from the shortage of chips: They are carefully reviewing their supply chains and are not only expanding their warehousing for chips. After all, the supply chains have thinned out after a pandemic for more than a year, even for important intermediate products, for example in the chemical industry.

06/07/2021

Security of supply is suddenly a priority again after years of just-in-time delivery. Chip manufacturers are also taking strong countermeasures and are pushing ahead with expanding their capacities at full speed. In Germany, the new high-tech chip factory from Bosch ensure regional supplies.

Misjudgments as the cause

But how did it come to that? Where does this lack of chips come from, which is currently keeping the auto industry and its employees in suspense? With the outbreak of the corona pandemic, demand for cars collapsed and chip manufacturers cut their production plans.

05/31/2021

When the demand for new vehicles suddenly increased surprisingly in the summer of 2020, chip manufacturers such as Infineon or NXP were overwhelmed by the demand. The current chip shortage is therefore based on a whole series of misjudgments – on the part of car manufacturers and suppliers, but also on the part of chip manufacturers. The lack of chips also shows that the auto industry did not come through the Corona crisis as badly as feared.

Daimler has to send thousands of employees on short-time work at two locations. The reason is not the sluggish sales, but the persistent shortage of electronic components. Most of the employees at the Mercedes plants in Rastatt and Bremen are affected. Daimler announced on Wednesday that car production would be reduced in the two factories and that short-time work would initially be applied for from April 23 to the beginning of May. More than 12,000 people are employed in the Bremen plant and around 6,500 in Rastatt. According to the company, employees in “strategic projects” and so-called basic functions are excluded from short-time working at both locations. This includes Daimler in the areas of maintenance and supply as well as qualification topics. First, local media reported on the short-time work plans at the respective locations.

Break at the wrong time

The production interruption apparently hit the Bremen plant at an inopportune time. The order situation is good, the “Weser Kurier” quotes a spokesman for IG Metall. In addition, the new C-Class produced in the plant there, which was presented in February and will soon be delivered to customers, is also affected. Daimler employees in Bremen had already been forced to take a break in January. At that time, too, the cause was the lack of semiconductor components. Upon request, Daimler did not comment in detail on the question of whether short-time work was now also planned for other plants. The only thing that was said was that they were in exchange with the chip suppliers and “if necessary” were to adapt the driving styles in individual plants. The situation is volatile, you drive on sight.

VW, Ford and Peugeot also affected

The global delivery bottlenecks for electronic chips are also forcing other car manufacturers to interrupt production. At Ford, for example, the production lines are at a standstill in some plants; at Volkswagen in Emden, production is interrupted for two weeks. Thousands of employees were put on short-time work. In France, the car manufacturer Peugeot, which belongs to the Stellantis group, is taking an unusual approach: Due to the lack of chips, analog speedometers will be used again in the 308 model instead of the digital speedometers originally intended. Digital dashboards are reserved for vehicles that are more in demand, such as the 3008 SUV. The customers should therefore receive a price discount, reported the French news broadcaster LCI. The current model of the Peugeot 308 expires in autumn. The next generation of compact cars should then have a digital speedometer again – provided that enough chips are available by then. So far, the car manufacturers have not dared to make a prognosis about the business effects of the chip shortage because the situation on the chip market is too confusing. According to analysts, however, the bottleneck has so far done more than harmed the corporations: As a result, the supply of new cars has decreased, while demand is high in China and the USA. This enabled higher prices to be enforced.

From Steffen Wurzel, ARD studio Shanghai In the country of origin of the Covid 19 pandemic, Corona hardly plays a role anymore. The economy is running again. This can be seen in the automotive industry, among other things. Analysts expect the Chinese auto market to grow by at least six percent this year.

Strong growth in electric cars

According to experts, sales of electric cars in China will increase at an above-average rate, which means that an increase of 70 percent is possible in the People’s Republic this year. So far, the US car company Tesla and numerous domestic e-car startups have been selling electric cars in China. The latter are called, for example, Xiaopeng, Nio , Li-Auto and Aiways. So far, these brands are hardly known in Germany. Nevertheless, China’s bustling e-car companies have made a difference in the boardrooms of the three major German car manufacturers. As far as China is concerned, BMW, Daimler and Volkswagen are now also focusing on electromobility.

German manufacturers with trade fair premieres

This can be seen from today at the auto show in Shanghai. Mercedes is showing its battery-powered models EQA and EQB, BMW is presenting the iX and the ID6 is having its world premiere at Volkswagen. Some analysts criticize that the largest German car company Volkswagen entered the e-mobility sector in China far too late. That rejected VW China boss Stephan Wöllenstein at the start of the fair. “Volkswagen almost has a good tradition of coming a little later, but all the more violently. That will probably be the case again with electromobility,” said Wöllenstein. “I think we’ve done our homework right now.” This gives the group the chance to make customers an offer that many competing companies, especially e-car startups, find it very difficult to find.

World’s largest auto show with almost no foreign visitors

With around 1000 exhibitors, “Auto China” in Shanghai is the largest auto show in the world. There will be almost no visitors from abroad. Because China’s leadership has kept the borders of the People’s Republic almost completely closed to foreigners for a good 13 months. This year, the trade fair in Shanghai is primarily a Chinese industry get-together.

In an international comparison, according to a new study, the German car manufacturers have survived the corona crisis best so far. This is the result of a study by the consulting firm EY, which was published before the start of the auto show in Shanghai today. Accordingly, Daimler, Volkswagen and BMW, with a combined decline in sales of ten percent, a drop in sales of 14 percent and a decrease in operating profit of 26 percent, fared significantly better on average than large manufacturers from other nations. Across the industry, the total sales of the 17 largest manufacturers worldwide fell by 13 percent in the previous year, according to the EY study. The car sales went down by 16 percent, the operating result by as much as 37 percent. The French brands were hit particularly hard. According to the study, only four companies had a positive profit development: Tesla, Daimler, General Motors and Kia.

China supports the industry

It is above all the flourishing business in China that saved the balance sheets of Volkswagen, BMW and Daimler. In 2020, more than every third new car (39.4 percent) was handed over to a Chinese customer. If you look at all 17 of the world’s largest car companies, the total sales of cars from these manufacturers in China only fell by four percent. In the US, the decline was 14 percent, in Western Europe, sales fell by 25 percent . Constantin M. Gall, Head of Automotive & Transportation at EY, explains: “While some companies got deeply into the red, others came through the crisis comparatively well, largely due to their regional sales focus, but also very much because of their current product portfolio is driven. ” “Companies with a large share in China benefited from the relatively stable development on the Chinese sales market. Those who are primarily active in Europe, on the other hand, had to accept massive losses,” said EY auto expert Peter Fuß.

Fair open to visitors

This also explains the great importance of the auto show that is now starting in Shanghai. Around 1000 exhibitors will present their products to hundreds of thousands of visitors in more than twelve halls by April 28th.

If you want to visit the fair in person, you have to show a negative corona test. In addition, visitors have to have their body temperature measured and use a mobile phone app to prove that they have not been in risk areas.

Praise for German automakers

The big topics of the fair are e-mobility and connectivity. And it is precisely in these areas that industry observers attest that the German representatives now have a good market position after a mixed start. They are now faster, more determined, said the German management consultant Peter Hage from the Beijing-based Districom Group. “The Volkswagen Group has done a very good job with the electric cars,” said the director of the Center for Automotive Research, Ferdinand Dudenhöffer. “The China strategy at VW-Audi-Porsche-Skoda is right.” Mercedes also started “lively” with new models in Shanghai. “Only BMW has been very hesitant in the past,” said Dudenhöffer. That is about to change: the German carmaker wants to generate a quarter of its sales with the sale of electric cars by 2025. This was announced by BMW China boss Jochen Goller in the run-up to the Shanghai Auto Show. Last year the share was around four percent.

“Tesla Hunters”, “Tesla Fighter” or even “Game Changer”: Industry experts and the media are praising the new fully electric Daimler luxury sedan EQS, which celebrated its world premiere yesterday. The Mercedes-S-Class is by far the most important and prestigious model series for the car manufacturer – a calling card for the car-interested world, with which one wants to present oneself from the best side and at the height of the engineering art. In the autumn of last year, the carmaker had already presented the S-Class with internal combustion engines. But that was yesterday’s world. The future, and actually the present, belongs to electromobility. And here the US competitor Tesla set the pace with its Model S in recent years.

Overslept the future?

According to Daimler’s plans, that should change from now on. “The EQS was developed to exceed even the expectations of our most demanding customers,” says CEO Ola Källenius, promoting the new luxury model. Above all, the management is concerned with catching up on the competition with Tesla at the top. “The importance of the EQS for Daimler’s reputation as an e-car builder is immense,” said industry expert Ferdinand Dudenhöffer Deutsche Welle . The new vehicle is both a technology carrier and a symbol of the Group’s ability to innovate. For a long time, critics have accused the group of lacking innovative strength. For too long, Daimler has stuck to the concept of gasoline and diesel cars, while Tesla has long been shaping the future and building a technological lead that needs to be caught up now.

From now on it should go faster

Tesla is also way ahead in terms of sales in the electrical sector. Last year, the Californian company set a new record with almost 500,000 vehicles sold worldwide. In the first quarter of 2021, the share of e-cars in total sales was only ten percent, but this sector is currently growing strongly. According to the current status, Daimler is aiming for a sales share of electrified cars of “more than 50 percent” in its passenger car division by 2030. This includes both all-electric cars and hybrids. According to Källenius, it could also be faster. At the moment you can feel a “strong demand” for purely electric cars and hybrid vehicles, he said at the presentation of the new electric sedan. If you project this momentum into the future, “it may well be that the planning bases that we have had so far are perhaps too conservative, that things can go faster, that things can be more.”

Tesla still has a head start

The fully electric EQS ​​should go on sale from summer. The price is not yet known. Jürgen Pieper, auto expert at Bankhaus Metzler, reckons with a proud price of 150,000 euros. With a range of 770 kilometers and the ability to charge quickly, Daimler’s EQS will be Tesla’s most important challenger, commented Kai Alexander Müller, Barclays auto analyst. The second generation of Tesla’s Model S, announced for this year, should travel 660 kilometers without having to recharge. Nonetheless, Tesla will remain unmatched for longer when it comes to software for communication and entertainment in the car, explained Metzler analyst Pieper. “Even the EQS does not yet offer as much as Tesla in terms of networking and constant software updates.” Nevertheless, the presentation is a success for Daimler: “The EQS is the challenge for pure electric car manufacturers, above all for the US electric car pioneer Tesla, says Stephen Reitman, analyst at Societe Generale.

Operating profit ninefold – investors enthusiastic

The Stuttgart-based carmaker is currently also receiving tailwind from the fresh quarterly figures that were published that morning. Earnings before interest and taxes (EBIT) rose to just under 5.8 billion euros in the first quarter. That was more than nine times the first quarter of 2020, which was marked by the outbreak of the corona pandemic – and more than experts had forecast. Daimler has not yet given information on sales and surplus, but it is clear that the group benefited in particular from the strong business in China. Daimler had reported a 22 percent increase in car sales for the first quarter, and sales soared by 60 percent in China alone. Investors like the latest news from Stuttgart. With a plus of almost three percent, the Daimler share leads the DAX.

Coffee has long been a minor matter at the traditional roaster Tchibo. The more than 11,000 employees of the Hamburg-based company worldwide sell everything you need or not, from tea towels to bed linen and garden hoses. Now the group of companies is entering the e-car business. There will soon be the Tesla 3 in white, black or silver or the latest electric vehicle from Fiat – can be ordered online and at a fixed price.

Tchibo offers the car as a car subscription – a kind of all-round carefree package between leasing and car sharing that includes everything except electricity. When the term is over, you simply return the car. The model is particularly interesting for all those who want to try out e-mobility first. Tchibo has also sold small cars of the Smart or Opel Adam type in the past.

The ADAC cooperates with Opel

The coffee giant isn’t the only retailer putting out feelers for the lucrative auto market. The discounter Lidl already had Fiat models, Edeka sold puntos from the Italian brand, and the Westphalian department store chain Marktkauf offered Kias and Daewoos discounts of up to 40 percent. Because of the fierce competition and falling profits, German retailers are always coming up with new ideas and selling everything that is not nailed down. Now the commercial part of the ADAC wants to get involved in the market: In a cooperation with Opel, different models are to be brought to the people in the future.

The retail industry is in a turmoil. Above all, the Association of German Opel Dealers (VDOH), which is already constantly at odds with the manufacturer, sees the cooperation between the automobile club and Opel with eagle eyes – its members are still allowed to deliver the new cars, but otherwise the business passes them by . However, the Opel dealers emphasize that this is a time-limited campaign. Anything else “would also violate the manufacturer’s obligation under the dealer contract,” said Uwe Heymann from the VDOH.

Car market has been competitive for years

The supremacy of classic car dealers has been shrinking for years – especially since the European Commission opened the markets in autumn 2002. Until then, the dealers had quasi regional monopolies, because the territories when selling were precisely defined. That is history – and the number of newcomers is large. The share of classic dealers in total sales is slowly but steadily declining.

However, this is only partly due to the Tchibos, Lidls and Edekas, whose sales volume is manageable and whose promotions are limited in time. Above all, it is due to the competition from the numerous Internet portals that sell cars completely online. “It started with start-ups that organized Internet sales and made it known,” says expert Karsten Neuberger from the University of Duisburg-Essen. The resulting transparency in the market has developed into a great advantage for customers.

There are now dozens of retailers on the Internet. The total share of these car sales in Germany is still manageable. However, around ten percent of all new car purchases in the private sector are already made over the Internet. This is the result of the current DAT report, a representative survey by Deutsche Automobil Treuhand. On behalf of the automotive industry and in cooperation with the Society for Consumer Research, this company researches market behavior in the sector.

Less of a status symbol than it used to be

There are several reasons for the trend towards online purchases: In times of minimalism and sustainability, the importance of one’s own car is becoming less and less important for more and more people. “The importance of the car is normalizing,” says Stefan Bratzel, head of the Center of Automotive Management (CAM) in Bergisch-Gladbach. “Today it is no longer the status symbol that we tinker with at the weekend,” said the car expert. This is especially true for the younger generation: “There the urge to drive has weakened significantly. The emotionality associated with it is nowhere near as it used to be.”

For many people, their own car is becoming a commodity like a washing machine – and that naturally has consequences for sales. According to the most recent DAT report, 41 percent of all respondents can imagine the complete processing of the car purchase over the Internet.

Bargain prices attract online shoppers

It is not uncommon for the lavish discounts that entice customers to shop online. Comparisons and studies by automobile clubs and market research companies show that you almost always save around 1000 euros on average – money that used to end up in the pockets of car dealers. What travel agencies and electronics retailers have been experiencing for years can increasingly also be observed in the car market. “We go to the dealership less. The dealership comes to us more,” said market watcher Bratzel; an unstoppable consequence of digitization.

The only consolation for the dealers: There is a great need for advice, especially with e-cars, the cars have to be regularly serviced and checked – a business that remains for those who have expertise and usually also the appropriate workshops. But the dealers do not want to be fobbed off only with the role of advisor, delivery agent and repairman. Especially not because the manufacturers are imposing ever stricter requirements and building regulations so that everything in the sales halls sparkles and glitters. “These are investments in the millions that can no longer be amortized”, says Antje Woltermann, managing director of the Central Association of the German Motor Vehicle Industry (ZDK).

Manufacturers also rely on online sales

Many retailers feel abandoned by their manufacturers. Because more and more large car manufacturers have discovered direct sales for themselves and are selling their new cars themselves over the Internet to retailers. The starting shot was given by Mercedes, where customers have been able to order the Smart directly since 1999. But VW, Volvo and many others also want to make greater use of this form of distribution in the future. This is cheaper for customers, but the ZDK calls for a statutory safeguard clause. If dealers are obliged by their manufacturers to make massive investments, they should also have a privilege when selling, says Woltermann, referring to Austria, where there are such provisions. “We need a European solution for this,” said the sales expert, who is also the spokesperson for the alliance of European car dealers and repairers.

CAM boss Bratzel also sees it that way, because in the end the manufacturers are dependent on their sales partners. “Fair ways have to be found between car dealers and manufacturers,” says the auto expert. But there will be no going back to the old days. The dealers, like the entire automotive industry, are facing a massive transformation process: “The party with many auto dealers who had a license to print money for a long time is over.”