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Automotive behemoths report feeble demand in Europe & North America

Automotive behemoths report feeble demand in Europe & North America

Global automobile manufacturers are reporting weaker demand in North America & Europe due to mounting inflation, in which customers are objecting to price increases and reserving their money for essentials instead.

Despite several upscale companies like Ferrari S.p.A. and Mercedes-Benz having increased sales predictions due to ongoing strong demand for top-end models, the outlook for most of the industry is desolate.

However, sources claimed that even though output is lower than usual, and delivery is significantly slower than the year prior, waiting lists for new orders are growing shorter as order books dwindle.

BMW AG Chief Executive Officer. Oliver Zipse noted that fresh inbound orders are reducing, particularly in Europe. Meanwhile, the sharp increase in inflation in North America and Europe markets makes it more challenging for automakers to repeat the past trend of passing on increasing expenses to their customers by raising prices to safeguard profits.

Arno Antlitz, Chief Financial Officer of Volkswagen Group, stated that even though their order books were still full for the upcoming months the decrease in demand is evident.

Notably, central banks have issued warnings that even though inflation in Europe and the US has soared recently, the peak may still be months away, which has resulted in a collapse in consumer and business confidence.

Similarly, Insights director for Europe at Cox Automotive Philip Nothard stated that the data from online vehicle dealerships and auction platforms indicates a drop in demand since March 2022.

In a survey conducted by Munich-based Ifo Institute, concerns about a gas shortage and the continued instability of the Chinese economy are causing German automakers' order backlogs to contract and price expectations to decline.

Stellantis N.V. CEO Carlos Tavares warned that the burden of buying a car on the household budget is something they intend to encounter next. Meanwhile, the automaker plans to continue passing on its own increased expenses to customers as a temporary solution based on current scenarios.

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Omkar Patwardhan

Omkar Patwardhan started his professional career in the hospitality industry. Having nurtured a deep-sated passion for words however, he found his way into content writing and now pens down articles for numerous websites, including News Origins, spanning the sectors of business, finance, and technology.