Losses & profits. As in 1995. The car market in Europe has returned to the sales it recorded over twenty-five years ago. According to statistics released Friday, October 15, by the Association of European Automobile Manufacturers, car sales in September fell by more than 23% compared to the same period in 2020. The manager, this time, is no longer the health crisis, which brought the chains to a standstill in the spring of 2000, but the shortage of electronic chips. This should not be absorbed for a year, which does not bode well for the profession.
Here is an experiment of decrease carried out in vivo, and which should contribute to reduce the share of the car, and thus its pollution. But it leads to paradoxical results. Faced with this collapse in sales, which should bring manufacturers to their knees, the reverse is currently happening. They have never made so much money! In its first half, the Franco-Italian Stellantis (Fiat Chrysler-PSA) posted nearly 6 billion euros in operating profit, the German Volkswagen, 11 billion euros. They who were satisfied with profit margins of 5% to 7% in very good years have exploded the bar of 10%, previously the sole prerogative of luxury brands.
Power is back in the hands of industrialists
How to explain such a big difference? First, because, due to a supply much lower than customer demand, power has returned to the hands of industrialists. No more unbeatable promotions to sell stocks, and hello price increases. For once, companies have managed to pass on the increased cost of their raw materials to the customer. Then they prioritized their most profitable models. Peugeot has worked hard on its 3008 models sold for more than 35,000 euros, and whose margin per product blithely exceeds the famous 10%. Finally, manufacturers have massively cut costs, reducing production, and even closing factories. Opel’s in Eisenach (Thuringia, central Germany) will not reopen before 2022.
Of course, the semiconductor crisis will have an end. The capacities being installed should relax this market towards the end of 2022. But this story, very cyclical, looks like a trial run of what awaits the industry, with the violent switch to electric. This costs a lot of money in investment, Stellantis will commit 30 billion by 2025, Volkswagen more than 60 billion by 2030, to open battery factories and release new models.
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