Why European auto sales may not rebound

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Specific conditions in several countries affected results there. Sales in France fell a modest 6 percent as the government continued to prop up the industry with lavish incentives, especially on electric and plug-in hybrid models. On the other hand, Spain’s deep hit was compounded by a rare snowstorm that paralyzed much of the country, the government’s refusal to make an emissions-tax recalibration revenue-neutral and the end of a “cash for clunkers” scrapping program in December.

On top of that, the global semiconductor shortage has led to numerous production halts, affecting popular models such as the Volkswagen Golf. Some analysts think Europe will be the hardest-hit region on the production side, partly because it is far from the Asian countries that produce the essential chips.

LMC Automotive expects a deficit of 200,000 vehicles in the first quarter in Europe. Ultimately, though, automakers including Renault Group, Toyota and Mercedes-Benz as well as analysts say the semiconductor shortage will probably not significantly affect production for the full year.

Sales will catch up, too, analyst Pete Kelly of LMC Automotive said this month. “If someone can’t acquire a car they want now because of a shortage of components, they’ll either wait or buy a different one,” he said in a webcast.

Europe’s weak sales results are affecting some automakers more than others. Those without a strong presence in China, which has come back strongly from the coronavirus crisis and sustained less damage from the chip shortage, are paying a price for that geographical imbalance.

They include Renault Group and the European brands of Stellantis such as Fiat and Peugeot, which have almost no market share in China. Renault last week posted an annual loss of $9.7 billion, its largest on record.

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Saurabh Shukla

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