Demand for new cars is slowing but strong in Europe, and must automakers laugh all the way to banks?
No, it’s bad because production is hampered by a shortage of critical semiconductor chips, despite the cry for new cars released after the coronavirus blockade is over. Again, that’s not really the case. Due to the shortage of products, major automakers do not have to compete with each other for each sale and get the highest profit margin for each sale.
“(The car business) is not an interesting industry. The fewer cars manufacturers sell, the more money they make,” Bernstein Research analyst Ernto Ellinghorst said in a report. increase.
Sales growth will continue to slow for the rest of the year, according to LMC Automotive, as it lowered its forecasts for Western Europe again. LMC Automotive reports on the first eight months of the year that this year’s sales are only 2.5% compared to the previous month’s forecast of 3.0% increase and July’s forecast of 9.6% increase in 2021. Said it wouldn’t increase. The annual sales rate for eight months was 11 million units. This is considerable to remember that the annual sales rate before the outbreak of the coronavirus was well above 14 million units. Currently, the market is weakening due to a shortage of semiconductors.
“The pandemic is not over in the region, but the biggest challenge facing the industry today is the lack of car chips. This is due to the current lack of availability of vehicles (sales). ) Is constrained and the prices of available vehicles are high .. The current challenge is likely to continue next year, so we have lowered the short-term outlook for the last few months, but supply In the second half of next year, when the constraints will be relaxed, the rise in sales will be more pronounced, “LMS Automotive said in a report.
According to Fitch Solutions, the chip shortage will worsen before it improves and will only begin to improve in 2022. This is because the DeltaCovid-19 variant continues to disrupt chip production in Asia.
“As new chip production capacity begins to come online, only an overall improvement in the global supply of chips after mid-2022 is expected, although some shortages will continue until mid-2023. Let’s do it, “says Fitch Solutions.
Data company IHS Markit
Investment Bank Morgan Stanley
“The situation has gone from” fluid “to something completely unexplained. If half-supply is recovering as a whole, why does this remain such a problem for cars, “Morgan Stanley said in a report.
“How long will this last? When will things get back to normal,” the report asked. Acute tension lasts until 2021 and normality does not recover until 2 o’clock.NS Half of 2022.
“Just as a chip shortage situation occurred in the industry in a sudden and unpredictable way, its recovery can occur in a sudden and unpredictable way,” the report said.
Bernstein Research noted that the combination of coronavirus pandemics and chip shortages produced fewer vehicles, raised pricing and second-hand market prices, and had the highest first-half margins in automotive history. However, the report points out that some investors believe that fundamentals performance will deteriorate as the industry returns to tracking sales as soon as the bottleneck is resolved.
“We believe this is an overly cynical and depressing view of the industry and its management team. Our conference room conversations are about supply and demand and vehicle pricing (of the manufacturer). ) Suggests that it is at the top of the agenda, “said the report headed” Premium Pricing-Don’t Ruin This! “.
However, investment bank UBS has heard very cautious comments about the quarter, saying production recovery could take longer than initially expected.
“(Manufacturer) unprecedented price / mixing conditions can last longer, support strong margins, but lose three volumesrd The quarter is likely to lead to a continuous decline in profitability compared to the first half, “UBS said in a report.