Tougher Times Ahead for European Auto Market, Here’s Why

There will be tougher times ahead for European auto market even as automakers in the mainstream, high-end and luxury segments posted relatively strong results despite persistently high inflation and growing concerns about the economic outlook.

As supply chains improve and more new vehicles hit the market, automakers will lose pricing power, and investors are signaling tougher times are ahead. Senior analyst Felipe Munoz said: "With new electric models trying to attract consumer interest and Tesla continuing to exert pressure, there could be a lot of instability in the European auto market over the next 12 months.

Growth in Europe's auto market is under threat from inflation and geopolitical pressures, and a price war could put many consumers off buying new vehicles. " On top of that, European officials raised their inflation forecasts, and higher interest rates have made it more expensive to borrow money to buy a car. Tesla's price cuts have added to pressure on sales, putting automakers under pressure to lower prices and sacrificing margins by focusing on more expensive models during the chip supply crisis.

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