Bosch: the epidemic and chip shortages will hinder global car production growth this year

According to reports, Bosch said that the continuing epidemic crisis and shortage of semiconductor chips will be a drag on the growth of global car production in 2021.

Bosch expects global car production to reach 85 million this year, more than 78 million in 2020, but still below the 92 million in 2019. In 2017, global car production reached a high of 98 million.

"We are quite optimistic, but we still have a long way to go," said Volkmar Denner, Bosch's chief executive. Bosch said that in the face of supply bottlenecks in the global semiconductor chip market, the company is not unscathed.

General Motors, the latest carmaker to be hit by chip shortages, said it would cut production at four plants next week. Stefan Hartung, head of travel solutions at Bosch Mobile, declined to comment on the reasons for the chip shortage, saying only, "all of us are working closely together to solve this problem."

Bosch also said that in addition to the epidemic, political developments such as Brexit, continued strategic competition between China and the United States and potential trade restrictions have all had a negative impact on global economic development. The company expects the global economy to grow by 4 per cent in 2021 after shrinking 4.5 per cent in 2020.

Despite the impact of novel coronavirus's epidemic crisis and the decline in automobile production, Bosch still maintained a positive development trend in 2020, and its performance was better than expected. According to preliminary financial data, group profits before interest and tax totaled about 1.9 billion euros (3.2 billion euros in 2019) and profit margins before interest and tax were about 2.5 per cent. After adjusting restructuring expenses, EBIT is about 3.3 billion euros and profit margin is about 4.5 per cent. Bosch Group's total sales reached 716 euros, down 4.4% from the same period last year after adjusting the exchange rate impact.

Car factories shut down last spring, and Bosch moved quickly to control costs and capital expenditure in line with the decline in sales, resulting in a free cash flow of about 5 billion euros, the highest level in the group's history.

In addition, it is worth mentioning that Bosch won 30 car electrification projects worth 7.5 billion euros ($9 billion) in 2020. This year, Bosch will invest 700 million euros in electric vehicle technology, up from 500 million euros in 2020.