A new report by S&P Global Mobility predicts possible difficult years for the European automotive industry, whose production could fall by around 1 million cars in a year.
A testing moment for car manufacturers?
Supply chain issues, the energy crisis and high inflation would probably pose growing challenges for the automotive sector. Parts shortages related to transport bottlenecks appear to be the most pressing. A major risk in the coming months could be attributed to the supply of energy, shortages of which would directly affect production volumes.
"The pressure on the automotive supply chain will be intense, especially the more one moves upstream from vehicle manufacturing," - said analyst Edwin Pope
It may even be possible for production to temporarily stop, similarly to the Covid-19 pandemic when essential parts for car production were in short supply. According to S&P Global Mobility, factories in Europe are capable of producing between 4 million and 4.5 million vehicles per quarter, but this could drop to as low as 2.8 million in the winter if a worst-case scenario occurs.
Interestingly, according to S&P Global analysts, the least exposed factories are no longer those in the Czech Republic and Germany, where full gas reserves and reduced consumption are helping to contain the situation, but those in Spain, Italy and Belgium. These are countries whose energy industry is less likely to be self-sufficient in the coming months, especially due to low reserve levels.
Consequences for sector companies
The above data may be concerning Volvo (Belgium), Stellantis (Italy and Spain), Volkswagen (Spain and Belgium), Renault (Spain) and Iveco (Spain and Italy). Stellantis owns many brands including Opel, Fiat, Alfa Romeo and Jeep. The crisis could therefore affect a large part of the sector, reflecting reduced revenues and profits.
Volkswagen share price, daily candles
Source: Conotoxia MT5
On the Conotoxia MT5 platform at 14:30 GMT+2, Volkswagen, Stellantis, and Renault shares are losing 0.9%, 0.9% and 4.1%respectively, with Volkswagen reaching the price levels of July this year falling to €121 per share.
Rafał Tworkowski, Junior Market Analyst, Conotoxia Ltd. (Conotoxia investment service)
Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.
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