Volkswagen Q1 China Sales Down 24% Due to Semiconductor Shortage and COVID-19 Lockdowns

by Park Pyunghee

Published 15 Apr.2022 14:23(KST)

[Photo by Reuters]

[Asia Economy Reporter Park Byung-hee] Volkswagen announced that its sales in China decreased by 24% in the first quarter of this year.

According to major foreign media on the 14th (local time), Volkswagen stated that sales in China declined due to lockdown measures in many cities across China from the beginning of the year amid the ongoing semiconductor supply shortage.

As COVID-19 infections continue to rise, China is maintaining strict quarantine measures. Currently, full or partial lockdowns are applied to about 370 million people in 45 cities. Due to these lockdowns, Volkswagen had to suspend operations at about 20% of its dealerships in China last month.

Volkswagen set a sales target of 140,000 ID electric vehicles in China this year, but sales in the first quarter amounted to only 27,100 units. Last year, Volkswagen also failed to meet its sales target of 80,000 to 100,000 ID electric vehicles due to the semiconductor shortage.

Volkswagen also reported that sales in Europe and North America decreased by 15% and 19%, respectively, in the first quarter.

Despite sluggish sales, Volkswagen said that its preliminary operating profit for the first quarter, excluding one-time items, was about 5 billion euros, an increase from 4.8 billion euros recorded in the first quarter of last year.

Volkswagen explained that it engaged in hedging transactions to prepare for fluctuations in raw material prices, and due to a sharp rise in raw material prices, a book profit of 3.5 billion euros was generated from these hedging transactions.

Volkswagen stated that the war in Ukraine, supply chain issues, and semiconductor shortages continue to negatively impact sales performance.

Volkswagen plans to officially announce its first-quarter results in early May.