Volkswagen's Chip Supply Risk and Earning Strength

3 months ago

Khloe Melly

"Yeah. So Volkswagen said that um it would need a sufficient supply of semiconductors to be able to meet its financial targets for 2025. So that's all related to this whole Nexperia debacle. So it's a really clear signal that the shortage of chips from Nexperia is having a major impact on those European car makers. Volkswagen said that it had secured enough components for the coming week to keep the German production plants running. Um but that it couldn't rule out disruption to production beyond that time. So that's obviously a big negative. But actually shares did gain this morning because there was a really strong free cash flow and a really strong margin in the earnings. So some analysts said that that really sets the stage for a potential reset in 2026 which echoes what we had from Mercedes yesterday with the shares rising because investors investors were expecting the worst to kind of behind. So it seems to be maybe the light at the end of the tunnel for their European car sector."

The commentary for Volkswagen emphasizes a critical semiconductor supply issue that could hinder its 2025 financial targets, a situation stemming from the Nexperia debacle. Despite near-term production risks, the company exhibited strong free cash flow and margins, with analysts suggesting a potential market reset in 2026, offering a cautiously optimistic outlook.

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