Automakers start to see weaker demand amid inflation squeeze


Share post:

BERLIN — Automakers are reporting lower demand in Europe and North America amid what analysts say is growing evidence that consumers are balking at higher prices and keeping their cash for necessities.

Although some upmarket brands such as Ferrari and Mercedes-Benz have raised sales forecasts due to continued high demand for top end models, the outlook for most of the industry is bleaker.

Waiting times on new orders are becoming shorter as order books thin out. That’s even with production slower than usual and deliveries well below last year, executives said.

“New incoming orders are falling,” BMW CEO Oliver Zipse said during an earnings call on Wednesday, pointing in particular to Europe.

Automakers have until now protected margins by bumping up prices, but the steep rise in inflation in North America and Europe could make it more difficult to pass on rising costs.

“Demand is coming down,” Volkswagen Chief Financial Officer Arno Antlitz said last week, though he said order books were still full for the coming months. “The warning signs are for Europe and North America, less for the Chinese region,” Antlitz said.

Inflation in Europe and the U.S. has soared in recent months with central banks warning a peak could be months away, sending consumer and business sentiment plummeting.

Data from online car dealerships and auction platforms showed a slowdown in demand since March this year, said Philip Nothard, insights director for Europe at Cox Automotive. “Consumers are currently very cautious,” he said.

A survey by the Munich-based Ifo institute released on Wednesday showed German carmakers’ order backlogs shrinking and price expectations on a downward spiral due to concerns about a gas shortage and continued weakness in the Chinese economy.

“The weight of buying a car on the household budget is something we will come up against,” Stellantis CEO Carlos Tavares said last month.

For now, the carmaker intended to carry on passing its own rising costs to consumers, but this could not last forever. “There is a limit to price hikes,” Tavares said.

In the U.S., Ford was considering bringing back discounts and incentives which were scrapped last year amid supply chain concerns, Chief Financial Officer John Lawler said. “That’s a relief valve going forward,” he said.


Please enter your comment!
Please enter your name here


Related articles

New data finds severe impact of European contact with Pacific islands

Pacific island nations suffered severe depopulation from introduced diseases as a consequence of contact with European vessels,...

Today’s latest news and headlines, Saturday, 1 October 2022

We’ve got the latest news stories and headlines in South Africa on Saturday, 1 October. The City of...

Native Americans in Harbor Springs Hold Vigil for Orange Shirt Day

People across North America Friday were recognizing Truth and Reconciliation Day, otherwise known as Orange Shirt Day. Orange...

LIV Tour makes Asian debut in Bangkok

GOLF: The eyes of the golfing world are turning to Thailand as the Land of Smiles gears...
English English Somali Somali