You may have heard of the semiconductor shortage caused by the Covid-19 pandemic. The global stay-at-home mandate, to stop the spread of C-19, allowed people to buy tech products, to enable them to work from home. Manufacturers of laptops PCs tablets, appliances, etc experienced a boom in sales. Modern tech products are basically run by a semiconductor, popularly referred to as “chips”. And because there are only a few chip manufactures, located mostly in China, the allocation of global chip supplies has fallen dramatically because demand has significantly exceeded supply. Every industry has been affected. The dearth of chip supplies is biting the motor industry particularly hard because the modern car is run by an onboard computer.
And European car manufacturers are feeling the pinch as new car sales deteriorate. The pandemic was bad enough for sales but the recovery is slower than expected. As a result, new car sales fell 18-percent between August and 24-percent in July compared to the same time last year. Although sales have recovered by 13-percent for the year to date, it actually represents less than half a percentage point improvement compared to the same time last year.
As a result of the global semiconductor shortage, car manufacturing is currently in a state of uncertain flux and will remain so into next year. European car manufactures are limiting auto production to their most profitable models/inventory. Spain, Italy, UK, France and Germany experienced double-digit declines throughout 2021. Spain saw auto sales decline by 29-percent, the worst out of all the major European economies.
The Stellantis Group, which comprises of Peugeot, Citroen, Vauxhall and the Fiat Group was the worst-performing European auto manufacturer as sales fell by 29-percent. Daimler experienced a drop of 38 percent in new car registrations, BMW 18-percent. Supply issues are further expected to impact the German automotive industry, stalling recovery possibly until the end of 2022.