European car production estimates have been cut significantly as the energy crisis rages.
According to a report published by S&P Global Mobility and reported by Reuters, European car production could fall by 40% in the fourth quarter as the energy crisis continues on the continent. The report highlights the dramatic increases in energy costs and energy rationing that may be necessary for the coming winter months.
According S&P Global Mobility report, they usually expect car production in the fourth quarter in Europe to total between 4 and 4.5 million units. However, they now believe that number could be as low as 2.75 million. Although the report does not specify how energy rationing specifically affects production, S&P notes that European manufacturers are already facing increased costs of up to 773 euros per car due to the crisis.
The most affected automakers will be those with the bulk of their manufacturing on the mainland, including BMW Group, Volkswagen Group, Renault Group and Stellantis. Perhaps brands that are already producing in limited numbers could be hit even harder; Ferrari, Lamborghini, McLaren or Aston Martin, to name just a few examples.
More global brands will be able to shift production to meet demand, especially those not primarily based outside of Europe; however, even these manufacturers may be influenced by considerably weaker consumer demand in Europe.
Automakers have yet to comment on moving production out of Europe. With many earnings calls to come in the coming weeks, expect automakers to explain how they will handle a possible continued supply shortage.
In the legislation, the EU has made it clear that its current objective is to protect citizens against increased energy costs. Recently passed legislation aims to subsidize electricity for consumers, cap energy prices and encourage reductions in energy consumption. We still don’t know how The EU will address manufacturersbusinesses and maintaining employment in these tumultuous times.
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