Daimler sees Q3 hit to Mercedes sales from chip shortage By Reuters

© Reuters. FILE PHOTO: An employee at a Mercedes-Benz dealership, wearing a protective mask, prepares a vehicle, amid the coronavirus disease (COVID-19) outbreak in Brussels, Belgium May 26, 2020. REUTERS/Yves Herman/File Photo

BERLIN (Reuters) -German luxury carmaker Daimler (OTC:) expects significantly lower sales at its Mercedes unit in the third quarter compared to the previous one due to a global shortage in semiconductors, its chief executive told Automobilwoche weekly.

“With the plant closings at semiconductor suppliers in Malaysia and elsewhere, the challenge has now become even greater, so that our sales in the third quarter will probably be noticeably below the second quarter,” Ola Kaellenius was quoted as saying in an interview published on Thursday.

The auto industry is facing renewed strains after a recovery in demand stretched supply chains earlier this year, with COVID-19 outbreaks in Asia hitting both chip production and operations at commercial ports.

Speaking to the industry publication, Kaellenius said he was confident the company was better prepared than before the pandemic for supply chain shocks. “We have made our business significantly more flexible and watertight,” he said, adding customers were used to waiting for highly sought-after products.

Daimler left its profit margin outlook for the year unchanged in July after reporting better-than-expected second quarter earnings.

It is not the only automaker to warn of dampened revenues in the third quarter due to chip supply disruptions. Competitors including Volkswagen (DE:), Toyota and Geely have flagged in recent weeks the shortage, as well as resurgent COVID-19 cases, could threaten sales in coming months.

Consultants J.D. Power and LMC Automotive also warned last week that U.S. auto retail sales were likely to have fallen sharply in August due to both factors.

Kaellenius refrained from predicting an end to the shortage, pointing out that supply strains such as the lockdowns in Malaysia were impossible to foresee. “What is important is that demand for cars is there,” he said. “At some point the chip problem will also be solved.”

Daimler is due to report third quarter earnings on Oct. 29.

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