German luxury carmaker Daimler said on Wednesday it expected to sell fewer Mercedes-Benz cars this year than previously forecast, as the industry continues to grapple with a global semiconductor shortage.

Unit sales in 2021 are now expected to be “at prior year level”, Daimler said in a statement, after earlier predicting sales would be “significantly above” the 2020 level.

Daimler and other manufacturers around the world have been forced to trim car production in recent months because of a semiconductor chip crunch fuelled by a pandemic-driven surge in demand for home electronics. The shortage threatens to slow carmakers’ recovery from the painful factory and showroom closures seen during the first coronavirus wave in early 2020, which plunged the industry into crisis.  Since then, however, consumer demand has bounced back, particularly in key market China.

Daimler said revenues and pre-tax earnings this year should be “significantly” higher than in 2020. “Daimler expects a gradual normalisation of economic conditions,” the company said, in part thanks to COVID-19 vaccination efforts.  However, the shortage of semiconductor components “will affect the business also in the second half of the year”. 

The Stuttgart-based firm said it booked a net profit of €3.7 billion in the second quarter, confirming preliminary results released last week. Over the same period last year, Daimler had posted a net loss of €1.9 billon. Revenues in the April-June quarter rose to €43.5 billion, up 44 per cent on the year.

The group’s return on sales, a closely watched measure of a company’s performance, climbed to 12.2% compared with -5.9% in 2020, in part thanks to a cost-cutting drive that will see Daimler cull thousands of jobs

The group’s return on sales, a closely watched measure of a company’s performance, climbed to 12.2 per cent compared with -5.9 per cent in 2020, in part thanks to a cost-cutting drive that will see Daimler cull thousands of jobs.

Daimler said it was on track to spin off its truck unit and list it on the Frankfurt Stock Exchange before the end of the year.

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