Volkswagen’s Sales Outlook to Drop Over Skills Shortage

InvestorsThe assembly line at the Volkswagen plant in Uitenhage, South Africa is seen Monday, January 9, 2006. The plant produces as many as 400 vehicles per month. The product range includes the Golf, Jetta and Polo and provides work to over 6000 employees. Photographer: Henner Frankenfeld/Bloomberg News
  • Volkswagen’s Sales Outlook to Drop Over Skills Shortage

Volkswagen has warned that a shortage of engineers is hampering efforts to get its cars to meet new anti-pollution rules, clouding its sales outlook and overshadowing a forecast-beating 23 per cent rise in underlying operating profit.

The automaker has seen a raft of engine experts depart since admitting to systematic emissions cheating in September 2015, that has left it short of engineers now needed to work on models complying with stricter emissions tests, Chief Executive Officer, Herbert Diess said on Wednesday.

“Engine development expertise has been lost,” said Diess told Reuters, explaining that getting engines certified for road use has become a lot harder under a new Worldwide Harmonized Light Duty Vehicles Test Procedure, known as WLTP that takes effect from September.

The carmaker last week poached BMW engine development expert Markus Duesmann to help overcome the problem, but warned that delays in getting road certification will result in bottlenecks for certain model variants between August and October.

“That impacts capacity utilization at our plants, so there will be closure days at our sites during this period,” Diess said. Although VW is sticking to its delivery targets, meeting them will be hard.

“One thing is clear, though, this will be a titanic task for the second half of the year, particularly on the margin side,” he added.

In a press conference on Wednesday to discuss second-quarter results, Diess said the changeover to the WLTP test procedure poses, “The biggest volume and earnings risk for Volkswagen.”

He said the introduction of WLTP rules was accelerated in the wake of Volkswagen’s diesel cheating while regulators now take a much more granular look at vehicles and test car pollution levels much more comprehensively.

“They look at what kind of tyres was fitted and whether the air conditioning is switched on,” Diess explained.

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Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years experience as a foreign exchange research analyst and trader.

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