Europe’s car sales recovery is held back by economic turmoil

Car sales in Europe rose for a third month in October as supply-chain issues eased, though there’s growing concern that deteriorating economic conditions are beginning to put off buyers.

New-car registrations climbed 14 per cent to 910,753 vehicles last month, the European Automobile Manufacturers’ Association said Thursday. The industry returned to growth in August after 12 consecutive months of decline.

While carmakers are having a somewhat easier time securing semiconductors and other components that have been in short supply, the region’s energy crisis is driving up costs and standing in the way of a more substantial recovery. Last month’s sales compared with an abysmal performance a year ago and were well below levels a few years back.

“Even with some improvement assumed next year, the market will remain far below what was considered normal operating volume prepandemic,” LMC Automotive analysts wrote in a report last week.

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Europe is bracing for a grim winter as double-digit inflation grips the region. Germany, the area’s biggest economy, is expected to contract while France, Italy and Spain may expand only slightly. In the UK, where car sales are on course for the worst year since 1982, inflation hit a 41-year high last month.

Manufacturers in the region are starting to see signs consumers are taking pause, with Stellantis flagging a slight pullback in purchases. Germany’s BMW similarly warned the region is on the back foot, with a levelling off in demand being more pronounced in northern European countries.

High-end luxury vehicles have been relatively resilient, and automakers are still benefiting from unfilled orders accumulated during the height of their supply-chain crises.

Registrations rose 26 per cent in the UK, 17 per cent in Germany and 15 per cent in Italy. Volkswagen was the standout performer for the month, with a 40 per cent jump from a year ago. – Bloomberg