Written by 11:23 am Europe Economy

Europe’s carmakers see demand slowing as inflation bites

Stellantis, owner of the Fiat, Opel, Peugeot, Citroën and Alfa Romeo brands, said consumers in Europe were slightly dialling back car purchases, joining Germany’s BMW in warning the region is on the backfoot due to surging costs for anything from energy to lending.

Carmakers long defied economic headwinds thanks to robust demand for their priciest models, with Stellantis and BMW reporting rising sales and earnings and Mercedes-Benz raising its outlook for the second consecutive quarter last month. 

Still, economic headwinds are building. Volkswagen last week cut its sales projection for the year, citing scarce semiconductor availability and persisting logistics challenges.

“High inflation rates and interest rate hikes are causing conditions for consumers to deteriorate, which will impact their purchasing behaviour in the coming months,” BMW said in a statement, adding it expected auto orders in Europe to slow.

Pent-up demand

So far, the auto industry has been shielded from the downturn by pent-up demand as parts shortages and logistics issues continue to weigh on production.

Stellantis’s vehicle inventory has ballooned 54% to 275,000 units since the start of the year — orders that should protect the company in the near term, according to chief financial officer Richard Palmer. Still, the executive said he was “carefully” watching how future orders develop.

“The macro environment is clearly very challenging, particularly in Europe,” Palmer said. “I wouldn’t be at all surprised if we were to see some demand softening into the middle of next year.” 

BMW reported better-than-expected earnings in the third quarter as higher prices for the carmaker’s top-end models helped offset flat deliveries. But the manufacturer only confirmed its full-year guidance, which may disappoint some investors who were expecting a forecast hike.

BMW doesn’t currently anticipate production disruptions due to energy shortages this year and sees a jump in vehicle deliveries in the current quarter from the three months through September.

As the outlook darkens, automakers are under pressure to finance ambitious electric-car rollout plans. Stellantis is targeting more than 75 fully electric models by 2030 with annual sales of 5m vehicles while maintaining double-digit returns over that time.

BMW sees sales of EVs like its iX3 sport utility jumping 70% next year after they more than doubled in the first nine months of this year.

• Bloomberg

Source link