Automakers registered the fewest new vehicle sales in the EU since 1996 as persistent supply chain snarls and record inflation afflict the industry.
New vehicle sales in the EU and four other states tracked by the European Automobile Manufacturers’ Association fell 17 percent to 1.07 million last month, it said in a statement.
Volkswagen AG was the hardest-hit major carmaker, with registrations dropping 24 percent from a year ago.
Photo: Bloomberg
While manufacturers including Volkswagen, BMW AG and Mercedes Benz AG last month said the shortage of semiconductors had started to ease, it takes time for any boost in production to flow through to showrooms and enable dealers to work down order books. Manufacturers are also dealing with raw material and energy costs, which are contributing to vehicle price increases.
“The industry will not overcome supply constraints anytime soon,” LMC Automotive said in an update this month. “Another concern relates to underlying demand, which has weakened in recent months as the economic outlook has deteriorated.”
Sales in major markets — including Germany and the UK — might return to growth this month due to an easy year-ago comparison, according to Bloomberg Intelligence.
While that suggests the industry stands a chance of snapping a 12-month streak of consecutive declines, it would be difficult to make up for production losses during the first half.
LMC Automotive now estimates Western European passenger car deliveries would drop 6.3 percent this year to 9.92 million. In January, the market researcher predicted sales would grow almost 9 percent.
Forecasting demand remains difficult due to risk that energy shortages will worsen. The main conduit for Russian gas to Europe went down for maintenance this week, and Berlin and its allies are bracing for Russian President Vladimir Putin to cut off flows for good in retaliation for sanctions and support for Ukraine.
“An increasing fear developing concerns potential plant shutdowns in Germany related to energy shortages,” Tom Narayan, RBC Capital Markets’s European auto analyst, wrote in a report on Tuesday last week. “The concern has more to do with the supply chain (chemical plants in Germany shutting down production of plastics used for car components, etc), and as such, may not impact German OEMs any more than others.”
Automakers have compensated for lost volume by charging higher prices and focusing on their most expensive and profitable models. However, with inflation soaring and consumers cutting back spending, that strategy could run up against limits.
“We are a little bit cautious about the outlook next year,” Volkswagen CEO Herbert Diess said in an interview last week with Bloomberg Television. “The world will remain unstable. That’s our assumption, so we have to be a bit cautious.”
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