Floods cut Porsche production by 17K units

RECENT flooding in Switzerland has led to Porsche losing production of up to 17,400 vehicles across several model lines, potentially equivalent to over 11 per cent of its first-half deliveries.

 

Novelis, an aluminium producer owned by India’s Hindalco Industries, said it declared what is called a “force majeure event” after recent flooding at an aluminium plant in Sierre, Switzerland.

 

“With our plant shut down due to the flooding, our ability to fully deliver to our automotive customers in Europe has been impacted,” the company said in an emailed statement.

 

Novelis supplies a joint venture co-owned by Porsche and said its facilities in Switzerland were impacted by exceptional flooding from the Rhone River. Several European countries, including Switzerland, have experienced significant flooding in recent weeks.

 

In addition to Porsche, Novelis numbers Volkswagen, Stellantis, Mercedes-Benz, Ford and BMW among its European customers.

 

The natural disaster may force Porsche to pause some production with the knock-on effect of causing the German manufacturer to lower its sales and profitability outlook for the financial year.

 

In a statement Porsche said the shortage of aluminium alloy is affecting production of all its models and could lead to shutdowns for one or more vehicle series. The disruption is expected to last several weeks.

 

Porsche said it will be unable to fully compensate for delays in production and vehicle deliveries during the financial year.

 

Publication Automotive News Europe (ANE) enlisted analysts Bernstein for potential outcomes and were informed the disruption would lead to the production loss of up to 17,400 Porsche vehicles.

 

Bernstein analysts said the disruption could lead to a production loss at Porsche in the second-half equivalent to over 11 per cent of Porsche’s first-half deliveries.

 

“Porsche will certainly be closely questioned over its cluster risk management that has left it so vulnerable to one critical supplier,” Bernstein said in the report.

 

Other sources for aluminium components from European manufacturers are being investigated with potentially positive outcomes.

 

The CEO of Norwegian aluminium manufacturer Norsk Hydro, Eivind Kallevik declined to comment when asked whether they could increase output to make up for the shortfall or was receiving enquiries from customers for more product.

 

Porsche isn’t the only automaker affected by the flood induced shortage as it has also hit the supply chains of BMW and Mercedes-Benz, both finding an alternative supplier.

 

Yet another European brand Audi has felt the impact of the flooding which it says has led to a shortage of special aluminium alloys at multiple suppliers, but the shortfalls were not directly impacting production.

 

ANE reports an Audi spokesperson as saying ,”We are in close contact with our suppliers and are working to avoid any supply bottlenecks”.

 

As a result of this natural disaster, Porsche said it now expects sales between €39 billion and €40 billion ($A66.5b) as a result of the disruption. It previously expected revenues between €40 billion and €42 billion.

 

ANE says the company sees a return on sales between 14- and 15 per cent for the year, down from its previous expectation of 15- to 17 per cent.

 

“The production disruption is the latest in a string of challenges for Porsche,” it said.

 

“The automaker is also struggling with low electric vehicle sales. It has lowered its EV ambitions, citing weaker-than-expected customer uptake.

 

“Porsche also faces muted demand in China amid a slowing economy and lower luxury car sales as customers gravitate to cheaper, locally made EVs.

 

“Porsche’s global deliveries fell seven per cent in the first half, with sales in China down 33 per cent,” ANE concluded in its report.

 

With Automotive News Europe