Europe’s Got Some Good Carma Right Now

Europe’s Got Some Good Carma Right Now
Daniel Johnston

9 months ago2 mins

Mentioned in story

What’s going on here?

Patient European carmakers were rewarded with jumping sales again last month.

What does this mean?

Carmakers have been wrestling with supply shortages for quite a while now – but with supply chains finding their feet at last, they might have finally broken free from that pesky chokehold. After all, overcoming those snags helped clear through some pesky order backlogs, letting VW, Renault, and Stellantis sell 32%, 40%, and 8% more cars respectively in April than at the same time last year. That saw European car sales overall climb 16% in April, marking a stone-cold nine-month winning streak. But there’s a catch: despite that year-on-year headway, deliveries during the first four months of the year are still about 20% below pre-pandemic levels. And with a faltering economy threatening to dent demand, reaching those heights again could be a long uphill slog.

European car sales
Source: Bloomberg

Why should I care?

Zooming in: Carmageddon.

Carmakers are facing a double whammy. They’re bracing for demand dips just as supply chains revive and a wave of new vehicles (including high-tech electric offerings) hits the market – a supply-demand picture that could erode any pricing power carmakers have managed to cling onto. And maybe call it a “triple whammy” – because Tesla’s price war is sending shockwaves across the industry too. That tough, three-punch combo could push customers to hold off on buying cars – creating a vicious cycle of falling sales for carmakers. Any way you slice it, then, there seems to be trouble up ahead.

The bigger picture: Ad astra.

Tesla is cranking up the pressure on competitors in a surprising way: launching ads for its EVs. See, while the car industry is notorious for splashing out on advertisements, Tesla’s typically swerved away, relying on word of mouth and referrals instead. This about-face suggests it’s ready to throw down the gauntlet and snatch market share from rivals – meaning that we could be entering a new era of fierce auto competition.

EV adoption
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