Europe and North America have seen less interest in new cars recently, manufacturers report. Analysts say there is growing evidence that consumers are keeping cash for essentials due to rising inflation. Although some luxury brands, such as Ferrari and Mercedes-Benz, raised their sales outlook due to continued high demand for high-end models, the outlook for most of the industry is gloomier, Reuters wrote.
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Waiting times for new orders are reduced as the number of orders is reduced. That’s despite production being slower than usual and deliveries down significantly from last year, industry executives say. “New orders are decreasing,” stated Oliver Zipse, the head of the German car manufacturer BMW, on Wednesday when the financial results were published. He mainly pointed to Europe.
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Automakers have so far preserved their margins by raising prices, but a surge in inflation in North America and Europe could make it harder to pass on rising costs, Reuters writes.
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“Demand is falling,” Volkswagen Group CFO Arno Antlitz said last week. He added, however, that the order books for the coming months are still full. “Warning signals concern Europe and North America, less so the Chinese region,” he concluded. China is the largest car market in the world, the second largest is the United States.
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Inflation in Europe and the United States has risen sharply in recent months, and central banks have warned that it may take months to peak. This caused a decline in consumer and business sentiment.
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Data from online car dealers and auction platforms shows a slowdown in demand since March this year, said analyst Philip Nothard of Cox Automotive.
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“We will struggle with how buying a car puts a strain on the household budget,” said Carlos Tavares, head of the Stellantis automotive group, last month. For now, the world’s fourth-largest automaker intends to continue passing on its own rising costs to consumers. This can’t last forever. “There are limits to price gouging,” Tavares said.
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American carmaker Ford is considering a return to a system of discounts and incentives, which it abandoned last year due to disrupted supply chains. “It’s an insurance valve for the future,” said the automaker’s chief financial officer, John Lawler.
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Questionnaire
Are you putting off buying a new car because of inflation?
No, but I’m looking for a cheaper car
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No, I’m sticking with the original plans
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I had no plans to buy a car
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A total of 151 readers voted.
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