BMW and Stellantis expect demand in Europe to slow as inflation bites

Europe’s inflationary crisis is beginning to catch up with automakers.

tellantis NV said consumers in Europe were scaling back their car purchases slightly and joined Germany’s BMW AG in warning that the region was lagging behind on rising costs for everything from energy to credit.

Automakers have long braved economic headwinds thanks to robust demand for their most expensive models, with Stellantis and BMW reporting rising sales and profits on Thursday and Mercedes-Benz AG last month raising its outlook for the second straight quarter. Nevertheless, economic headwind is building up. Volkswagen AG last week lowered its sales guidance for the year citing scarce semiconductor availability and ongoing logistical challenges.

“High inflation rates and interest rate hikes are causing worsening conditions for consumers, which will affect their purchasing behavior in the coming months,” BMW said in a statement, adding that it expects car orders in Europe to slow.

BMW declined by up to 3.2 percent in Frankfurt. Stellantis fell as much as 2.2 percent in Paris.

So far, pent-up demand has protected the auto industry from the downturn as part shortages and logistics problems continue to weigh on production.

Stellantis’ vehicle inventory is up 54 percent since the start of the year to 275,000 units — orders that Chief Financial Officer Richard Palmer said should protect the maker of Ram pickups and Fiat cars in the short term. Still, the manager said he was “carefully monitoring” how future orders unfold.

“The macroeconomic environment is clearly very challenging, particularly in Europe,” Palmer said when speaking to reporters. “I wouldn’t be at all surprised if demand eased off midway through the next year.”

BMW reported better-than-expected earnings in the third quarter as higher prices for the automaker’s top-of-the-line models helped offset flat deliveries. But the manufacturer only confirmed its full-year guidance, which may disappoint some investors who had expected a guidance increase, RBC analyst Tom Narayan said in a note.

BMW does not currently anticipate production disruptions due to energy shortages this year and sees a jump in vehicle deliveries in the current quarter from the three months to September.

As the outlook dims, automakers are under pressure to fund ambitious EV rollout plans. Stellantis targets 75+ all-electric models with annual sales of 5 million vehicles by 2030 and maintains double-digit returns over that timeframe.

BMW sees sales of electric vehicles like its iX3 Sport Utility rising 70 percent next year after more than doubling in the first nine months of this year.

Last month, the German automaker announced it was investing $1.7 billion to expand its US plant in South Carolina to build six new EV models for the local market by the end of this decade. BMW and Stellantis expect demand in Europe to slow as inflation bites

Fry Electronics Team

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