Vehicle sales in the EU skidded to the lowest on record for February, as manufacturers brace for more disruption to output from supply chain issues exacerbated by the war in Ukraine.

New-vehicle registrations in the EU fell 6.7 percent to less than 720,000 for the month, the European Automobile Manufacturers’ Association said yesterday.

When including the UK and free-trade association countries, sales were down 5.4 percent. That is a steeper drop than in January, and extends the industry’s streak of declines to eight months.

“European auto demand was already tepid before Russia’s invasion of Ukraine led to production halts and components shortages that will further delay a recovery of European auto sales in 2022,” Bloomberg Intelligence analysts said in a note.

The industry faces a difficult year as lingering shortages of semiconductors, the war in Ukraine and fresh COVID-19 outbreaks in China put further strain on stretched supply chains.

Sales in Europe are expected to remain flat or worse this year, down from its earlier estimate of as little as 5 percent growth, Bloomberg Intelligence said.

While markets including Germany and Spain reported modest growth last month, Italy and France recorded double-digit percentage declines.

While Russia’s invasion of Ukraine did not have a major impact on sales last month, that is expected to change. Ukraine is a key source of wire harnesses that power automotive electrical systems.

Plant shutdowns in the country could lower European vehicle production by as many as 700,000 units in the first half of the year, Wells Fargo & Co analyst Colin Langan said.

Volkswagen (VW) AG and BMW AG have idled factories due to the supply disruption, while Mercedes-Benz AG has reduced output at a German factory. VW said this week it would revise its outlook if it is unable to get wire harnesses for more than three or four weeks.

Stellantis NV and VW are among automakers that struggled last month, with registrations declining 17 percent and 12 percent respectively. Toyota Motor Co and BMW grew sales 4.7 percent and 1.3 percent respectively. Hyundai Group was a standout with a 25 percent gain.

Automakers have tried to weather the supply crises by prioritizing their highest-earning models and raising prices. BMW on Wednesday said that operating returns for its automotive business are to remain robust this year, even as the war in Ukraine and the chip crisis continue.

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Source: https://www.taipeitimes.com/News/biz/archives/2022/03/18/2003774982