2023 threatens to be a “horror year”: global car sales fall back by a decade

2023 threatens “horror year”
Global car sales fall back a decade

Supply chains are faltering, production lines are standing still: According to a study, global production and sales of cars will fall this year to the lowest level in more than ten years. This is not good news for buyers. The manufacturers, on the other hand, benefit from the shortage.

Car manufacturers around the world are probably selling fewer new cars this year than they have in more than ten years. A study by the Duisburg Center Automotive Research (Car) forecasts a slump in global car sales to 67.6 million vehicles. That’s more than five percent less than last year and around a quarter less than in 2017, the industry’s best year to date. Fewer cars were last sold in 2011. According to study author Ferdinand Dudenhöffer, the reason for the decline is the disrupted supply chains. “The global car market has been hit hard,” says Dudenhöffer ntv. Missing supplier parts would have partially paralyzed production. “Cars have become scarce.”

This deficiency is reflected in significantly increased prices. “We are already seeing price increases at individual car manufacturers and this will continue,” said Dudenhöffer. The discounts for new car buyers that have been common for years are lower than they have been for years. The situation on the car market has completely reversed itself: “Previously, the customer was always king on the car market,” says Dudenhöffer, “now the seller has the upper hand.”

Manufacturers are using the situation to pass on the increased cost of materials, inflation and production downtime to customers. That is why the current situation is mainly a problem for customers and less for companies. “The latest figures from companies have shown that car manufacturers are still making good money despite everything,” says the car expert. After the industry suffered for years from high overcapacities and a sometimes ruinous price war, manufacturers are now using the situation “to put their cost situation in order”.

“Horror Year 2023”

The car shortage is not only felt in new cars. “In saturated car markets like Germany, when you buy a new car, you give up a used one,” writes Dudenhöffer. If new car sales collapse, the supply of used cars will also drop. In April, for example, the number of used car registrations fell by twelve percent year-on-year.

According to Dudenhöffer, the reason for this “disorder” on the car market is the coincidence of several crises. Semiconductors in particular have been in short supply for more than a year. In addition, there are the recent tough lockdowns in China, which paralyzed parts of the industry for weeks, ships are damming up in large ports and blocking important trade routes.

According to Dudenhöffer, a quick solution to these problems is not in sight. 2023 could be a “horror year” for the car market, as the supply problems are accompanied by falling demand due to the weak economy and falling incomes. The supply chains should only run largely undisturbed again in 2023 or 2024. “Then the car market will fall back into its old pattern,” predicts the economist. That means: “Many vehicles, many car manufacturers who are vying for fewer customers. Then the discounts and price reductions will come back.”

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