VW CEO Says Automaker Will Continue To Make Output Cuts Due To Chip Shortage

Volkswagen Group chief executive Herbert Diess says that the car manufacturer will have to continue making output cuts at its Wolfsburg factory in response to the ongoing semiconductor shortage.

While recently speaking with workers at the site, Diess said the parts shortage at the company’s German headquarters continues to pose a challenge, although he noted that VW has made progress in managing bottlenecks.

“Wolfsburg is particularly hard hit by the semiconductor situation,” Diess said. “Capacity adjustments are therefore necessary, also in the medium term.”

Diess told Wolfsburg staff that VW has introduced an early-warning system on chips and that engineers have also identified 150 “technology alternatives to replace missing semiconductors,” Bloomberg reports. “We’re seeing opportunities to further increase production, particularly in the second half of the year,” Diess added.

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Production at the Wolfsburg factory was hit particularly hard last year with just 330,000 vehicles manufactured there as VW favored the production of more expensive models at other sites at the height of the shortage. Labor leader head Daniela Cavallo says the Wolfsburg plant is expected to produce around 570,000 vehicles this year.

The Wolfsburg site has previously landed Diess in hot water with employees. Last year, he suggested that the automaker may have to slash tens of thousands of jobs if it doesn’t make the factory more competitive in the age of electrification. These comments almost saw Diess stripped of his title as chief executive and while he has held on to his position, he has ceded some of his responsibilities.

Cavallo says Volkswagen should place its forthcoming electric vehicle plant near the main Wolfsburg site, or close to it, in order to protect jobs. This factory should produce around 250,000 electric vehicles annually.

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