PASSENGER-CAR deliveries in Europe gained 11 per cent in January as automakers like Volkswagen and Stellantis fed off order backlogs and demand for electric cars recovered.
New-vehicle registrations rose to 1.02 million units last month, the European Automobile Manufacturers’ Association said on Tuesday (Feb 20). Fully electric vehicles made up 11.9 per cent of total deliveries, up from 10.3 per cent a year ago, as automakers seek to reboot purchasing amid a bruising price war.
While carmakers continue to benefit from healthy order books, the recovery back to pre-pandemic levels will get more challenging this year. Economies are slowing in Germany, the UK and France, the region’s three biggest car markets respectively, adding to consumers’ concerns as they struggle with high borrowing costs.
“The reversal of a trend of demand exceeding supply – which has persisted since the second half of 2020, pushing pricing and profit margin higher – is a key industry risk this year as vehicle output normalizes and orders soften,” Bloomberg Intelligence analysts Michael Dean and Gillian Davis said in a note.
Germany’s economy may shrink slightly in the first quarter, according to Bundesbank president Joachim Nagel, while France on Sunday lowered its economic forecast and now expects just 1 per cent growth this year. The UK slipped into a recession during the second half of last year
Any softening will add to concerns over waning growth in EVs. While deliveries of battery-electric vehicles jumped 29 per cent in January, their share of the market was at the lowest in a year.
EV market share “may stall this year due to consumer apathy,” Dean and Gillian said, predicting only a marginal increase to 16 per cent of sales.
Cooling enthusiasm in the EV transition is putting pressure on carmakers to recalibrate strategies while they remain on the hook for increasingly stringent regulation to cut CO2 emissions.
Governments like Germany are rolling back incentives, weighing on demand.
A number of manufacturers are delaying rollouts of new models and car-rental firms are paring purchases for their fleets. Renault, which is banking on a major product rollout this year, is in discussions with other carmakers to reduce the costs of new EVs via partnerships. BLOOMBERG
