EU: European car sales hit record low amid shortage of computer chips

EU: European car sales hit record low amid shortage of computer chips

Car sales in the European Union have reportedly been driven to a new low as the auto sector still grapples with the acute shortage of computer chips caused by the COVID-19 pandemic, according to the most recent data published by the European Automobile Manufacturers Association (ACEA).

As per the industry figures, registration of new passenger cars fell by 2.4%, to 9.7 million in 2021, marking the poorest performance in the EU since the bloc started keeping records in 1990.

This drop supposedly follows the historic 24% fall suffered due to pandemic restriction in 2020, with new car registrations dropping 3.3 million below the 2019 pre-pandemic sales numbers.

ACEA said that the shortage of semiconductor chips impacted car production negatively all year, especially in the second half, causing a sharp fall in sales as well.

Although carmakers had downplayed the impact in the beginning, chip shortages eventually led to slow production and idle factories.

While car sales had recovered greatly in the second quarter, they were still down by almost 20% in the second half of the year.

Alexandre Marian, Managing Director of global consultancy firm AlixPartners, said that while the chip supply shortage will continue affecting the start of 2022, the situation is likely to improve by the middle of the year, although this does not mean that other problems, involving things like labor, raw materials, and supply chain shortages, might not spring up.

The pandemic has also caused a surge in prices of raw materials and severe labor shortages in a number of domains, apart from disrupting manufacturers and the supply chain due to lockdowns and sick employees, while the global demand for electronics increased.

Germany, Europe’s largest car market, accounting for a quarter of total sales last year; over 2.6 million, saw a 10.1% drop, bringing down the overall EU figure while Spain, France, and Italy posted relatively modest gains.

Many of Europe’s top automakers saw a dip in sales across the region, with Volkswagen’s market share decreasing to 25.1% with a 4.8% drop, while Renault Group saw a 10% drop, and Stellantis a 2.1% drop.

BMW saw a 1.5% increase in registration, while Korea-based Hyundai Group saw an 18.4% gain in the EU.

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