European passenger car registrations fell 19% year-on-year in March, why did it decline for nine consecutive months?

Data released by the European Automobile Manufacturers Association (ACEA) shows that European passenger car registrations fell by 19% year-on-year in March, which is the ninth consecutive month of decline.

The major European market segments all performed poorly. Among them, passenger car registrations in France and Germany fell by 20% and 18% year-on-year, while passenger car registrations in Italy and Spain fell by nearly 30% year-on-year.

Cui Dongshu, secretary general of the Association, said in an interview with the first financial reporter that the situation in Ukraine is still fermenting, and the factories of automobile manufacturers in many parts of Europe are shutting down production and stopping work. "The continuous disruption of the supply chain of European auto companies will put supply chain security issues above price factors. To some extent, this will have the potential to reshape the supply chain and trade structure of automotive companies. He said.

The main problem also lies on the supply side

Guo Fangjie, head of UnionPay big data new energy automobile industry research and a special overseas automobile researcher of Dolphin Investment Research, said in an interview with the first financial reporter that the number of passenger car registrations in Europe fell sharply in March, and the main problem was on the supply side. At present, the upstream raw materials required for automobile manufacturing - chips, electronic wiring harnesses, non-ferrous metals and other components are still not in place, which affects production capacity.

According to the data of un Comtrade, the total export volume of palladium, nickel and copper between Russia and Ukraine accounts for 45%, 42% and 37% of the European market. According to data provided by market research firm Trend Force, Ukraine supplies nearly 70% of the world's high-purity neon gas. Among them, copper and nickel are the key metal materials for automobile production; palladium is used to make catalysts used in automobiles to reduce harmful gas emissions; and neon gas is an indispensable inert gas in the chip production process.

AcEA said that as of now, excluding suppliers, European car factories have stopped production, resulting in 1.23 million car production losses in the EU, and about 1.11 million workers have been affected. The situation of parts companies is also not optimistic, and Continental, an important European parts company, said that more than 40% of its factories have been closed.

Market research firm LMC Automotive said record inflation in the euro area may also begin to affect consumers' purchasing decisions.

Guo Fangjie also believes that European consumers are currently under greater pressure, "First of all, inflation in the region has been high, but wage increases have not risen synchronously, resulting in a shrinking of people's purchasing power." Secondly, due to the rise in the price of upstream raw materials, in order to ensure profits, many car companies have to raise the price, which affects the cost of car purchase for European consumers. Third, high energy prices have pushed up the cost of cars for European consumers. ”

Eurostat's latest data shows eurozone inflation reached 7.5% annualized in March, up from 5.9% in February. Eurostat data also show that in the last three months of last year, the euro area's nominal hourly wages grew by nearly 1.5% year-on-year. Seasonally adjusted, wages per employee in the euro area fell by 1% year-on-year in the fourth quarter, and real wages for employees in Germany and Italy fell by about 3% year-on-year.

The latest figures from Eurostat show that euro zone energy prices rose 44.7% year-on-year in March. According to the data of global Petrol Price, a market research institute, as of the 18th, the price of diesel in Germany and France reached 2.031 euros / liter and 1.860 euro / liter respectively.

European car companies are looking for transformation solutions

For how to solve the problem of supply bottlenecks, European car companies have been looking for solutions. Some car companies have begun to consider establishing more stable and low-cost supply chains in countries and regions such as Southeast Asia to ensure stable shipments in the future.

"We have realized that we have to be involved in the entire supply chain of car production, and with the situation in Ukraine disturbed, we are even more aware of the urgency of this issue." Murat Aksel, Head of Purchasing at Volkswagen, said, "We will prioritize how to guarantee uninterrupted delivery of parts rather than competitive pricing." In addition, we can also accept dual procurement of certain parts, which may change the practice of the automotive industry for many years, that is, the use of single procurement of parts and immediate procurement. ”

In Guo Fangjie's view, although this may avoid geopolitical risks and the impact of the global epidemic, the drawbacks are also more obvious, which will increase the cost of car companies, and it will take a long time to establish a supply chain.

Of course, European automakers have also proposed other options, that is, to reduce car production capacity as a whole and focus on higher-end cars with higher profits.

Volkswagen group said that over the next eight years, Volkswagen will cut its gasoline and diesel product line in the European market by 60%, which involves at least 100 models from multiple Volkswagen brands. BMW CEO Oliver Zipse also said: "I want to really emphasize that we are not driving the sales strategy. ”

Arno Antlitz, Volkswagen's chief financial officer, said volkswagen made the change because the company's fixed-cost base has been significantly reduced, so the company is less dependent on sales growth. In 2019, the company reduced the fixed cost of production by 10%.

In Guo Fangjie's view, at present, many European car companies are developing in the direction of shortening the supply chain and reducing production capacity, but because the European automotive industry is transforming towards electrification and intelligence, the electric vehicle supply chain will still be retained. A recent survey of European car consumers released by consultancy Deloitte shows that there is a growing interest in hybrid and electric vehicles (EVs) in the region. On the whole, the sales of electric vehicles in Europe are still expected to rise in the future.