FRANKFURT: Daimler AG said early-year growth for its main Mercedes-Benz division will be erased by the global semiconductor shortage that the luxury-car maker expects to put a damper on the second half.

       Mercedes car sales are now expected to be roughly flat this year rather than up significantly from 2020. The lack of chips will have an adverse impact on the business as the year progresses and visibility on how supply will develop is low, Daimler said.

       The automaker’s shares fell 1.4% as of 9:50am in Frankfurt yesterday, paring an earlier decline of a much as 4%. The stock is still up about 19% for the year.

       Rivals from Volkswagen AG to Jeep maker Stellantis NV have coped with the scarcity of chips better than initially feared, but also warned the issue will affect earnings later this year.

       Facing limitations on just how many assembly lines they can keep running, automakers are prioritising output of their biggest money makers and abstaining from discounts customers are accustomed to even from luxury brands.

       “The entire industry is currently struggling with longer delivery times, which unfortunately also affect our customers,” chief executive officer Ola Kallenius said. “We are doing what we can to minimise the impact.”

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       BMW AG, which has said it expects a “solid” increase in deliveries to customers this year, outsold Mercedes by more than 26,000 units in worldwide second-quarter sales and took over the pole position in the United States because of better access to chip supply.

       Sales in the current quarter might be below the second quarter and could stabilise in the fourth quarter if no additional bottlenecks occur, Daimler’s Kallenius told analysts.

       Despite the semiconductor shortage, Daimler’s second-quarter revenue came in better than analysts expected, climbing 44% to €43.5bil (US$51.2bil or RM216.81bil). The manufacturer also slightly raised the outlook for margins at its trucks and buses unit and mobility division.

       Earnings before interest and taxes (Ebit) surged to €5.19bil (RM25.89bil), the company said, confirming preliminary numbers released last week. Profit margin at the cars and vans division reached double digits for a third straight quarter.

       Daimler had forecast in April that Mercedes will be more profitable than it’s been in years, thanks to resurgent vehicle demand in the midst of the pandemic.

       At the time, the company raised its projection for annual return on sales for its cars and vans division to 10% to 12%, up from 8% to 10%.

       Executives were more somber this quarter, warning headwinds from raw material prices are poised to intensify in the second half and the company might not be able to compensate for this with efficiency gains like in the first six months.

       Bloomberg Intelligence automotive analyst Michael Dean said: “Daimler’s Mercedes Ebit margin now appears to be on a downward second-half trajectory, given lower unit sales expectations, raw-material headwinds and the ramp-up of lower-margin BEV (battery-electric vehicle) sales, in a move likely to be mirrored by German peers who still have to report.”

       The Stuttgart-based manufacturer said a plan to spin off its sprawling truck division is on track to be completed before the end of the year. Mercedes will update investors on plans for battery technology and its growing lineup of electric vehicles today. — Bloomberg