SHANGHAI, Mar 18 (SMM) - The Association of European Automobile Manufacturers (ACEA) said on 17 March that in February, new car registrations in Europe were around 804,000 units, down 5.4% year-on-year to a record low for the same period in recent years and down even more than in January. European car sales have fallen for the eighth consecutive month, and the European car market is facing increasing challenges as the tension between Russia and Ukraine exacerbates supply chain pressures, and more car manufacturers will also encounter greater production disruptions.
Bloomberg Intelligence predicts that in the worst case scenario, European car sales may struggle to achieve the previous 5% growth forecast for this year.
Sales performance in the five major European car markets was barely satisfactory in the month. Italy and France saw double-digit sales declines of 22.6% and 13.0% respectively, while the UK, Spain and Germany grew by 15%, 6.6% and 3.2% year-on-year respectively. Germany remained the European country with highest sales at around 200,000 units, with the UK selling around a third of Germany's volume.
Multiple challenges facing the 5% annual growth target for the European car market
Although the Russia-Ukraine conflicts did not have a significant impact on sales in February, the future of the European car market does not seem promising. Analysts at Bloomberg Intelligence, led by Michael Dean, said in a report that "European car demand was lukewarm long before the escalating situation in Russia and Ukraine led to factory shutdowns and parts shortages, and the situation in Russia and Ukraine will further delay the recovery of European car sales in 2022. "
One of the biggest challenges facing car companies at the moment, even more than the shortage of semiconductors, is the shortage of wiring harnesses. VW CEO Herbert Diess admitted on 15 March that the Russia-Ukraine issue has overshadowed its prospects for the year, and that the shortage of wiring harnesses in Ukraine had replaced the shortage of semiconductors as the biggest supply chain problem the company was currently facing.
Ukraine is a key producer of automotive wiring harnesses, with 17 harness production facilities. According to consultancy firm AlixPartners, wire harnesses are the most important automotive component exported from Ukraine to the EU, accounting for nearly 7% of EU wire harness imports. Colin Langan, an automotive analyst at Wells Fargo, revealed in a report that the closure of the Ukrainian wiring harness plants could lead to a loss of up to 700,000 vehicles in Europe in the first half of this year.
Production has been suspended at some European plants of the Volkswagen Group and BMW Group due to supply disruptions, and Mercedes-Benz has cut the production at its German plant. Diess even noted that VW would have to adjust its 2022 performance expectations if it could not get wiring harness supplies within three to four weeks.
In response to the wiring harness supply challenge in Ukraine, automotive component suppliers and car manufacturers have already started to take action. German automotive parts supplier Leoni plans to double the production of wire harnesses at some of its plants in other regions in order to try to compensate for the loss of production at its Ukrainian plants. However, as the capacity expansion will require more factory space, machinery, tools, workers and capital, Leoni is likely to need at least two to three months to adjust, so Leoni also says it will not be able to make up for the lost harness production in Ukraine this year.
Despite the many challenges, Langan believes that Europe is likely to make up for lost production this year. In addition, car manufacturers have been weathering the supply crisis by prioritising the production of higher-margin models and raising prices. In recent days, BMW said that its automotive business will maintain strong revenues this year, despite the impact of the escalating situation in Russia and Ukraine and the continuing chip crisis. VW also remains optimistic about the situation this year, with the company expecting its global sales to increase by 5% to 10% year-on-year in 2022 and revenues to rise by 8% to 13% year-on-year, in spite of ongoing supply chain problems.
![[SMM Analysis]La mayor producción de tetróxido de cobalto elevó la producción de sulfato de cobalto de China casi un 7% intermensual en agosto](https://imgqn.smm.cn/usercenter/mzgdV20251217171729.png)
