Daimler believes that the chip shortage will continue until 2022 Reuters

Author: Nick Carey

London (Reuters)-The global shortage of semiconductor chips will affect car sales in the second half of 2021 and will continue until 2022. Mercedes-Benz manufacturer Daimler AG (DE:) said on Wednesday, but the outlook for this year’s profit margins remains unchanged.

Due to chip shortages during the coronavirus pandemic, Daimler (OTC) has cut production together with other automakers this year, prompting the German company to focus on higher-margin models.

Chief Financial Officer Harald Wilhelm told investors that although the chip shortage will continue until 2022, it will not be as severe as this year.

The high-end automaker also faces the challenge of high steel and aluminum prices in the second half of 2022. It said it has low visibility of how chip supply will develop.

“Improving supply visibility is our top priority,” CEO Ola Källenius said in a conference call with analysts and investors, although he said the chip shortage “is a problem that can be solved.”

During the recovery of the global economy from the coronavirus crisis, the demand for cars has surged, and as inventories have decreased, the prices of new and used cars have risen, leading to car shortages.

Mercedes-Benz’s car sales in the second quarter increased by 27%, of which Daimler’s second market after China, Europe, increased by 54%.

After soaring at the end of 2020 and the first quarter, Mercedes-Benz sales in China increased slightly by 5.8% in the second quarter.

The company said that it expects the full-year car sales to be the same as in 2020. It had previously predicted that this year’s car sales will be much higher than last year.

Daimler stated that the adjusted profit margin of its truck and bus division in 2021 will be between 6% and 7%, which is lower than the previous forecast of 6% to 8%.

The company confirmed that adjusted group earnings before interest and taxes (EBIT) for the second quarter was 5.42 billion euros ($6.38 billion), and the automotive and truck division exceeded analysts’ targets.

Daimler announced preliminary results last week.

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