Shortage of chips: car sales lower in Europe in 2021 than in the 1990s

The hoped-for recovery has not taken place: sales of new cars in Europe marked a new downward record in 2021, held back by the health crisis and shortages of electronic chips which prevented the production of millions of cars. Last year, 9.7 million vehicles were sold in the European Union, according to data published by manufacturers on Tuesday: it is the lowest figure recorded since the start of the statistical series in 1990, lower 2013 and 1993, already dark years for the automotive industry.

With a sixth consecutive month of decline in December, sales even fell by 2.4% in Europe compared to the year 2020, paralyzed by the Covid. The storm is European: in the East, the Chinese market recovered (+4.4%), while in the West the American market recovered slightly (+3.7%). “This fall is the consequence of the shortage of semiconductors which has slowed down automobile production throughout the year, and more particularly in the second half of the year”, explained in a press release the association of European manufacturers (ACEA).

The year 2021 was marked in particular in Europe by the fall of Germany, its largest market, which recorded one of the largest declines with a plunge of 10.1% over one year and 2.6 million vehicles sold. After a 2020 marked by factory closures and health restrictions, the German automotive sector had experienced a sustained recovery in early 2021. But the market quickly faced bottlenecks in global markets: chip shortages electronics, essential for car assembly, and logistical problems have dampened hopes of a lasting recovery. No. 1 Volkswagen fell 4.8%

The No. 1 Volkswagen fell by 4.8%

Belgium, the Netherlands and Denmark also show sharp declines. France remained stable (+0.5%) but at its lowest, with 1.66 million units sold in 2021, i.e. a level close to 1975. Spain, which had been one of the hardest hit countries in 2020, remains at its lowest (+1%). Italy, also hard hit in 2020, posted a slight recovery in 2021 (+5.5%). The leading manufacturers of the market are feeling the blow: the No. 1 Volkswagen fell by 4.8% with 2.4 million cars sold. The group’s main brand fell by 6.7%, Skoda by 9.8% and Audi by 3.3%, while Porsche and Seat rebounded.

“The manufacturer has tried to push its electric offer by launching several new models, but the demand for electric does not compensate for the decline in interest from buyers for the traditional segments”, commented the firm Jato Dynamics on its blog. For the firm Inovev, it might also be “that the sharp increase in the average price of cars as well as a wait-and-see attitude of customers vis-à-vis the electric vehicle slows down purchases and encourages potential customers to keep their vehicle longer”.

French manufacturers in the hard

Stellantis fell by 2.1% over one year with 2.1 million units sold: the group limited the decline on its main brands Peugeot, Fiat and Citroën, and recorded good sales at Jeep. The Renault group fell by 10.2% despite the good scores of its economy brand Dacia.

Now firmly established at the foot of the podium, Hyundai-Kia is doing well (+ 18.4%) thanks to its range of electric and hybrid cars, especially SUVs. Toyota also jumped 9.1%. ACEA does not count Tesla sales. As for German premiums, BMW remained stable (+ 1.5%) while Daimler fell (-12.4%), strongly hampered by the shortage of chips.

And the recovery might be delayed. “The start of 2022 will still be difficult in terms of the supply of chips,” Alexandre Marian, from AlixPartners, told AFP. “Things should calm down in the middle of the year, but that doesn’t mean that other problems won’t appear, on topics related to raw materials, logistics, or labor shortages,” said underlined the expert.