Auto sales are deteriorating in Europe, with months of meek recovery giving way to deliveries that no longer even measure up to last year’s pandemic-depressed results.
New vehicle registrations fell 18 percent last month and 24 percent in July from a year earlier, the European Automobile Manufacturers’ Association said yesterday.
Sales are up just 13 percent for the year, less than half the percentage increase posted at the year’s halfway point.
Photo: Reuters
SCARCE INVENTORY
Auto production is being suppressed by a global semiconductor shortage that the chief executives of Volkswagen AG, Daimler AG and BMW AG have said would linger well into next year.
If scarce inventory were not enough to drive up prices, automakers are also prioritizing their most lucrative models as the number of vehicles they can produce is constrained.
“The chip shortage is causing production losses, and demand that’s actually high can’t be met,” EY said in a note. “Traditional combustion vehicles have been hit the most, while the boom for plug-in hybrids and electric cars continues.”
The July and August figures are the worst for the two months since the tail end of the eurozone economic crisis in 2013. The declines were broad-based, with Europe’s biggest auto markets — Germany, France, the UK, Italy and Spain — all seeing double-digit drops each month.
So far, automakers have been holding up just fine. First-half earnings, margins and cash flows were the highest in the industry’s history, Bernstein analyst Arndt Ellinghorst said in a report on Wednesday.
“Isn’t autos a funny industry,” he wrote. “The fewer cars OEMs sell, the more money they make.”
Europe’s biggest economies might be having a harder time. Supply crunches are hitting Germany beyond just the automotive sector and threatening to derail its recovery.
Of Europe’s five big markets, Spain performed worst last month, with sales plunging 29 percent, followed by Italy with a 27 percent drop.
LINGERING UNCERTAINTY
Uncertainty related to the COVID-19 pandemic likely added to problems caused by the chip shortage, RBC Capital markets analyst Joe Spak wrote in a report earlier this month.
Among the largest automakers, European sales fell 14 percent for Volkswagen Group, 29 percent for Stellantis NV and 23 percent for Renault SA last month. Registrations dropped 38 percent for Daimler AG and 18 percent for BMW AG.
“While the pandemic is not over in the region, the single biggest challenge facing the industry is now the auto chip shortage,” LMC Automotive analysts wrote in a report last week. “Any meaningful recovery in demand, following the improved economic backdrop in the region, is now being held back.”
UNPRECEDENTED PACE: Micron Technology has announced plans to expand manufacturing capabilities with the acquisition of a new chip plant in Miaoli Micron Technology Inc unveiled a newly acquired chip plant in Miaoli County yesterday, as the company expands capacity to meet growing demand for advanced DRAM chips, including high-bandwidth memory chips amid the artificial intelligence boom. The plant in Miaoli County’s Tongluo Township (銅鑼), which Micron acquired from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion, is expected to make a sizeable capacity contribution to the company from fiscal 2028, the company said in a statement. It would be an extended production site of Micron’s large-scale manufacturing hub in Taichung, the company said. As the global semiconductor industry is racing to reach US$1 trillion
Singapore-based ride-hailing and delivery giant Grab Holdings Ltd has applied for regulatory approval to acquire the Taiwan operations of Germany-based Delivery Hero SE's Foodpanda in a deal valued at about US$600 million. Grab submitted the filing to the Fair Trade Commission on Friday last week, with the transaction subject to regulatory review and approval, the company said in a statement yesterday. Its independent governance structure would help foster a healthy and competitive market in Taiwan if the deal is approved, Grab said. Grab, which is listed on the NASDAQ, said in the filing that US-based Uber Technologies Inc holds about 13 percent of
Taiwan’s food delivery market could undergo a major shift if Singapore-based Grab Holdings Ltd completes its planned acquisition of Delivery Hero SE’s Foodpanda business in Taiwan, industry experts said. Grab on Monday last week announced it would acquire Foodpanda’s Taiwan operations for US$600 million. The deal is expected to be finalized in the second half of this year, with Grab aiming to complete user migration to its platform by the first half of next year. A duopoly between Uber Eats and Foodpanda dominates Taiwan’s delivery market, a structure that has remained intact since the Fair Trade Commission (FTC) blocked Uber Technologies Inc’s
Memory chip stocks extended their losses yesterday after Alphabet Inc’s Google publicized research that could allow more efficient use of the storage needed for artificial intelligence (AI) development. SK Hynix Inc and Samsung Electronics Co, South Korean leaders in the market, fell more than 6 percent and about 5 percent respectively in Seoul. In the US, Micron Technology Inc, Western Digital Corp and Sandisk Corp slid more than 2 percent in pre-market trading, after they all closed lower on Wednesday. Memory companies have been on a tear in recent months as the rapid development of AI infrastructure triggered a spike in chip
RSS