Automakers reporting lower demand in Europe and North America amid inflation squeeze

A number of car manufacturers claim to have experienced a decline in demand in the European and North American markets due to inflation. Because, consumers prefer to save their money to meet their daily needs.

Although some premium manufacturers such as Ferrari and Mercedes-Benz did not feel this way, the decline occurred in the general segment. The decrease in demand resulted in the order waiting time (indent) being shorter than usual.

“Orders for new cars continue to fall,” said BMW CEO Oliver Zipse, as reported by Automotive News Europe, Tuesday (9/8).

Manufacturers affected by inflation are now forced to raise prices to protect their margins. However, in fact the sharp rise in inflation in North America and Europe can make it more difficult for them to raise prices. The more expensive it is, the less consumers will want to buy it. “Demand is down. This is a warning to Europe and North America,” said Volkswagen Chief Financial Officer, Arno Antlitz.

Inflation in Europe and the US has soared in recent months with central banks warning that a peak could be months away. What was revealed by the central bank then caused negative sentiment and had an impact on a number of businesses.

However, a number of manufacturers are actually looking good in inflationary conditions. Hyundai Motor Group's US retail market share during the first five months of 2022, for example, came in third, up from sixth last year. This is according to new vehicle registration data compiled by S&P Global Mobility.

Data from online car dealers and auction platforms show demand has fallen since March this year, said Philip Nothard, director of European insights at Cox Automotive. “Consumers today are very careful in buying a car,” he explained.

A survey conducted by Munich-based Ifo shows the German automaker's order backlog is shrinking.

Stellantis CEO Carlos Tavares said the strategy of raising the cost of cars could not last long. “Because there is a limit to the price increase,” said Tavares.

In America, Ford is even considering reinstating discounts and incentives it canceled last year amid supply chain concerns.