Automobile Sales in Europe Decreased by 22%

Automobile sales in Europe fell in December. The trend continues for the sixth month in a row, indicating the difficulties automakers face due to the chip supply crisis.

According to the European Automobile Manufacturers’ Association, the number of passenger car registrations fell by 22% last month. New car sales fell 1.5% last year. This is the worst rate since the association began monitoring the market in the early 1990s.

After months of forecasts that the chip deficit would decrease, manufacturers’ expectations deteriorated. Purchasing a sufficient number of semiconductors will remain a challenge this year as well. Renault said the shortage would peak during the first six months of the year and then gradually improve.

“Automobile sales in 2022 will be as difficult as in 2021. We still have a pandemic around the world, as well as a wave of Omicron in Europe, which significantly limits consumer behavior,” said Peter Fuss, a partner at EY Automotive Team.

Germany’s largest car market shortened by 27% in December, making the country of BMW and Volkswagen the only one with an annual decline. An intensified pandemic forced the government to reintroduce a series of restrictions and the continent’s largest economy reduced by 1% in the last quarter of the year.

While supply disruptions become an increasing problem, manufacturers take advantage of the high prices of cars as access to both new and used cars is limited. Last year, most companies successfully shifted production to higher-end, high-margin cars.

“There is an obvious difference between market activity and basic demand. According to our prognosis, supply problems in the industry will continue, mainly due to a shortage of semiconductors, but that impact will gradually ease in 2022,” LMC Automotive analysts stated in their current month report.