Car sales in Europe: The forecast has changed, but the improvement in global supply promises a break

Given the short -term forecast of car sales in Europe, the level has dropped again due to China and Russia, investors fear that the underlying demand growth will run out of steam as the market struggles. the supply chain will disappear.

However, there is good news about the shortage of chips and, despite their current low levels, global car sales should return to strong growth within a few years.

The investment bank Morgan Stanley said in a report that, thanks to China’s reopening, the supply of semiconductors should be greater. At the same time, lower demand for consumer electronics has freed up access to semiconductors for the automotive industry. According to another investment bank, UBS, gradually and material semiconductor supply will increase next year. Meanwhile, demand for premium sedans and SUVs has outpaced consumer spending in consumer resistance to high -income, while the electric vehicle (BEV) battery sector continues to function well.

With its monthly vehicle sales update for Western Europe, LMC-Vehicle again revised its forecasts downward. The company now indicates that sales fall 7.4% in 2022 to reach 9.81 million vehicles, while a month ago the company forecast a decline of 6%. At the beginning of the year, LMC Automotive predicted that vehicle sales would increase by 8.6%, but Russia’s invasion of Ukraine ended in all hope.

In 2019, before the covid-19 pandemic, 14.29 million vehicles is sold in Western Europe.

“We predict the 2022 market decline from 2020 and 2021, and at approximately two-thirds of the levels seen in 2019, due to our baseline assumption that supply chain challenges will limit results throughout the year. this and in 2023, ”LMC Automotive said in its report.

“Risks remain tilted to the downside, with the most immediate threat in perspective being a longer-than-expected conflict in Ukraine or worsening supply chain disruptions due to China’s policy on covid-19. The demand situation is increasingly worrying, as evidence of the fact that consumer confidence in Europe is currently weaker than at the beginning of the pandemic, ”the report said.

Western Europe includes some large markets, such as Germany, Great Britain, France, Spain and Italy.

According to Morgan Stanley, even if events remain unchanged, the prolonged global automotive chip shortage could end. “We view improving supply chain availability as an underrated trigger for value transfer between those who have benefited from downstream pricing power, and those facing rising input costs and falling upstream production, “Morgan Stanley said in its report.

According to an earlier report from UBS, the bank’s pattern of rising prices for the manufacture of raw materials bounced back from the top in early March, thanks to nickel and lithium prices.

In parallel, Automotive News Europe indicated that mercedes at BMW received enough high-tech components to allow production capacities to return to their highest levels. Automaker BMW has seen a steady supply, although it has expressed some uncertainty in the coming months.

Last month the German Automotive Research Center (CAR) said global vehicle sales in 2022 will decline 67.6 million, compared to 71.3 million last year. Experts believe that car sales will reach their lowest point in 2020, with 68.6 million vehicles were solddue to the global economic lockdown following the covid-19 pandemic.

Highest vehicle sales in 2017, with 84.4 million vehicles were sold. CAR forecasts a slow but steady improvement in vehicle sales: 70.8 million vehicles were sold in 2023, 73.4 million in 2024 and 75.4 million in 2025.

“Worldwide, this is the worst car market in ten years,” CAR said.

Article translated from Forbes US-Author: Neil Winton

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