Automakers worried about European economy

Automakers BMW and Stellantis voiced concerns about Europe’s economic outlook on Thursday, joining a chorus of retailers and others in warning of declining consumer confidence on the continent and hitting their shares.

“Obviously the macro (economic situation) in Europe is more challenging, which gives me pause personally,” Stellantis chief financial officer Richard Palmer said on a conference call with analysts. “If there was one place I was more concerned about, it would be Europe than anywhere else really macro-based.”

This follows a dire assessment of consumer sentiment in Europe from consumer goods firm Unilever and news of falling spending by Europeans on Amazon.

Like other major auto companies, Stellantis and BMW have been hit by supply chain disruptions stemming from the global coronavirus pandemic that have curtailed car production.

They also benefited from strong consumer demand amid low vehicle supply, allowing them to raise prices and keep them high even as semiconductor shortages show signs. attenuation.

BMW posted a 35.3% jump in third-quarter revenue despite a slight drop in vehicle sales. Stellantis said its revenue rose 29% on the back of a 13% increase in vehicle sales as more semiconductors became available.

Analysts fear demand will weaken as automakers get their hands on supplies they need, hurting prices and hurting profits.

But this week Ferrari said it was confident about its prospects for this year and 2023 as demand for its luxury carsas well as its pricing power, remained solid.

BMW and Stellantis said Thursday they have vehicle order books that extend through the second quarter of 2023.

But BMW chief financial officer Nicolas Peter said high inflation and rising interest rates could hurt buyers’ wallets.

“This leads to deteriorating conditions for consumers, which will affect their behavior in the months to come,” he said. “We therefore continue to expect our above-average order books to normalize, particularly in Europe.”

He added that customers were unhappy with the wait new carsso “a slight reduction (in orders) would not be negative”.

Palmer said Stellantis was “prepared for any weakness in demand” but in the short term it had been affected by a shortage of drivers to deliver its cars to dealerships.

“At the moment we cannot build enough cars,” he said. “And the ones that we can build in Europe right now, we’re struggling to get to the point of sale.”