CAR sales in Europe fell to a new low last year, the automotive sector hit by a double whammy — COVID and a shortage of computer chips.
Registrations of new passenger cars in the European Union slid by 2.4 percent in 2021, to 9.7 million vehicles, the worst performance since statistics began in 1990, according to the European Automobile Manufacturers Association (ACEA).
That follows the historic fall of nearly 24 percent suffered in 2020 due to pandemic restrictions, which brought new car registrations in the EU to a stunning 3.3 million below the pre-crisis sales of 2019.
The lack of semiconductors, the computer chips used in a multitude of car systems in both traditional and electric vehicles, was given as the main reason holding back the industry.
“This fall was the result of the semiconductor shortage that negatively impacted car production throughout the year, but especially during the second half of 2021,” the ACEA said .
Car manufacturers initially downplayed the impact of the chip shortage, but it eventually led them to slow production and even idle factories.
EU car sales did rebound strongly in the second quarter, but for most of the second half they were down by around 20 percent.
The short-term projections for supplies are not good.
“The start of 2022 will still be difficult in terms of supplies of chips,” Alexandre Marian at the AlixPartners consultancy said.
“The situation should improve in the middle of the year, but that doesn’t mean other problems won’t crop up, concerning raw materials, supply chains and labour shortages.”
The chip shortage is a consequence of the pandemic as manufacturers were disrupted by lockdowns and sick employees, as well as supply chain problems and increased global demand for electronics.
The pandemic has also sent prices for many raw materials soaring and caused labour shortages in some areas.
While the markets in France, Italy and Spain posted modest gains, a 10.1 percent drop in Germany dragged the overall EU figure down.
Germany is by far Europe’s largest car market, accounting for a quarter of total sales at more than 2.6 million last year.
If the shortage of semiconductors was the major factor holding back a rebound, the EU also underperformed compared to the other major markets where the recovery from the pandemic was stronger.
By contrast, the Chinese car market grew by 4.4 percent and the US market by 3.7 percent.
The decline in European sales may also reflect “the sharp increase in the average price of cars as well as an expectant attitude by consumers concerning electric vehicles which is pushing them to put off purchases and hold on to their current vehicle longer,” said analysts at Inovev, an automotive data analytics firm.
Europe’s top three auto manufacturers all had a drop in sales in the bloc.
Volkswagen managed to retain the top spot, but a 4.8-percent drop in sales to 1.4 million vehicles caused its market share to dip to 25.1 percent.
Stellantis, the merger of Italy’s Fiat group and France’s Peugeot-Citroen, suffered a smaller 2.1-percent drop to 2.1 million units, nudging its market share higher to 21.9 percent.