Europe's car sales go from uninspiring to ugly amid chip crunch

Automotive Industry

Source: Automotive News Europe, 2021-09-16

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-car registrations fell 18% in August and 24% in July from year-ago levels, industry association ACEA said on 16 September. 

Sales are now up just 13% for the year, less than half the percentage increase posted at the year's halfway point.

Auto production is being suppressed by the global semiconductor shortage that the chief executives of Volkswagen Group, Daimler and BMW Group have warned will linger well into 2022.

And if scarce inventory weren't enough to drive up prices, automakers also are prioritising their most lucrative models as the number of vehicles they can produce is constrained.

"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. "Any meaningful recovery in demand, following the improved economic backdrop in the region, is now being held back."

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 sweeping, with Europe's biggest car 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 15 September.

"Isn't autos a funny industry," he wrote. "The fewer cars OEMs sell, the more money they make."

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