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The automotive industry sees the light: it expects sales to recover in 2023 and increase its profitability

“It was a difficult, demanding year. We started with the prediction that 2022 would be a return to normality, and we found war in Ukraine. The chip problem worsened in the first half of the year, and then the energy crisis, which led to a scenario of increased costs.” This is how José López-Tafal, General Director of the National Association of Automobile and Truck Manufacturers (Anfac) summarizes this year. “It was the shaker that created the perfect storm,” he insisted at a media briefing.

This cocktail of factors created a dual situation. On the one hand, sales figures for new and manufactured cars are far from what they were before the pandemic, although they are already improving. On the other hand, the financial results and profitability of companies are mostly positive.

In Spain, the automotive sector evaluates its health by two variables: registrations and production figures. The first will be 830,000 units at the end of the year. This figure is 3% lower than in 2021 and 34% lower than in 2019, when 1.5 million new cars were registered. But, ahead of 2023, there is optimism. “Our projections are that 900,000 units will be sold. We hope that we will look at these data upwards”, assured López-Tafal.

There is no normalcy in factories, but there is improvement

If registration is sure to improve, production is already perceived. In 2021, 2.1 million cars were assembled in Spain, and this year it will reach 2.2 million. Producers predict an “improvement in recent months”, which is almost 3% higher than production. This does not mean that everything is back to normal, as the lack of chips is still confirmed. Also materials such as aluminum, nickel or palladium, which until now were imported from Ukraine or Russia.

In production, manufacturers do not set targets for next year, but, without a date, they consider it possible to return to the 2.8 million cars assembled in the year before the pandemic. The same indicator was already reached in previous years, for example, in 2017. In fact, the figures to which the industry is now striving are lower than those achieved at the beginning of the century, as between 2000 and 2003 three million cars were produced by Spanish factories.

There is still time to get this back to normal as there are still active Temporary Employment Adjustment (ERTE) filings. This week, Seat asked to extend it until March 31, 2023, as it continues to see problems with semiconductors and various raw materials. ERTE affecting more than 10,000 workers.

Currently, there are 16 factories in Spain, all of which are controlled by foreign multinationals. The volume of plants, which is significantly far from other European countries. For example, in Germany – headquarters of Volkswagen, BMW or Porsche, there were 42 factories at the end of 2021; in Italy, 22; According to data published by the European Manufacturers Association, ACEA, 30 in France.

The same association publishes registration figures for Europe as a whole, and there, too, a change in trend can be seen. Looking at the data from January 1 to October 31, they are down 8% from a year ago. However, if we look at October alone, car sales improved by 12% compared to the same month in 2021. Spain is almost close to the European average at 11.7%, but in Germany they rise to 17%. and in Italy 14.6%.

And, in detail, brand by brand, there are manufacturers all over Europe whose registrations are increasing dramatically. In October, Audi sales increased by more than 64% across the EU. Volkswagen, 37%; and 38% of Toyota. On the other hand, other brands are not moving at the same pace. In the same month, the standards of Renault and Mercedes are unchanged, while those of Stellantis (which group Peugeot, Citroën or Fiat, among other brands) fell by 4.3%.

I have been waiting for months to receive the car

Just because the auto sector has been improving in the years since the crisis doesn’t mean that normalcy has fully returned to dealerships. Currently, those who want to buy a car are likely to have to wait at least two months to receive it, according to various sources in the sector.

Not all models are the same and, in many cases, brands prefer some over others. Not just because they have more power or are easier to sell. Also because there are models that leave more space and are more interesting. This in an inflationary context where new cars are 10% more expensive than a year ago, according to the latest CPI figures published by the National Institute of Statistics (INE).

This difference in prices and the weight of sales of the models, which gives a higher margin, leads to the fact that car companies raise their results. Stellantis, for example, posted net revenue of 42.1 billion euros in the third quarter, up 29% from the same quarter in 2021 “which mainly reflects volume growth and net price margins,” he explained.

Volkswagen said its operating profit rose 64% to 4,269 million euros in the same quarter. “The results were driven by solid profitability, particularly in the Premium and Sport & Luxury segments,” he asserted. “The first, with a 14% margin and the second, with 19.4%, which underlines the continuation of price discipline and the good progress of margins.”

Another high-end German manufacturer, BMW, reported that it improved its net profit by 23% to 3,180 million euros in the third quarter of the year. He highlighted the weight of its pricing policy and the growth of revenues, which increased by more than 35% in the three months and exceeded 37,000 million euros.

The year is a few weeks away, but if nothing happens, manufacturers could be signing up for a better year than 2021. So the car companies that assemble in Spain multiplied their profits by more than five, as they went from almost 190 million to 1,011 million euros in the pandemic 2020.

Criticism of the government for not speeding up electrification

In this scenario of duplicity, car manufacturers in Spain are taking aim at the government for not promoting the electrification of the mobile fleet when the deadline for the sale of combustion vehicles in Brussels is 2035.

“We are oxen, not carts. The producers are the ones who push,” López-Tafal assured the press. “And public events are not simultaneous, they do not go at the same pace.

According to Anfac’s calculations, this year the Spanish market will reach 80,000 new units of electrified passenger cars (between pure electric and plug-in hybrids). A figure that exceeds the 2021 figure by 20%, “but does not reach the 120,000 unit milestone marked for this year and represents only one in 10 sales in the overall market, which further widens the gap with the European environment, in which the average electrified accounts for 20% of total sales- S”.

“Why is Portugal 10 points higher if we have the same offer?” asked the person in charge of Anfac, who called for the promotion of the charging network and the implementation of tax incentives. Also, because the new law on mobility does not give priority, as perceived, to public transport over private. “We are not Norway, but we are not Gabon either. We have our own dynamics,” he said.

Source: El Diario





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