Energy crisis to stall EU vehicle production

EUROPEAN automotive production is expected to plummet by “millions” according to a new report published by S&P Global Mobility.

 

The analytics firm says the ongoing energy crisis – a by-product of the Russian-Ukraine conflict – and continued component shortages could trigger production stops as soon as the last quarter of this year and continuing through 2023.

 

S&P says part shortages and supply bottlenecks are “likely to weigh most heavily on automakers from November through the spring of 2023”, particularly if energy is cut during the colder winter months.

 

“The pressure on the automotive supply chain will be intense, especially the more one moves upstream from vehicle manufacturing,” said S&P Global Mobility analyst Edwin Pope, who warned that factories may have to halt shipments of completed vehicles due to shortages of singular components.

 

Governments across Europe are intervening to reduce the impact of the energy crisis on industry, but analysts warn the measures may not be enough to shield car-makers from production halts over winter.

 

Just-in-time supply models will also face problems, S&P warns, as some suppliers implement more energy-efficient shift schedules. It warns that the ensuing parts shortages and bottlenecks could trigger production shuttering akin to those that occurred during the COVID-19 pandemic and the Russian invasion of Ukraine.

 

S&P had forecast that European automotive factories would produce up to 4.5 million units per quarter over the coming 12 months if the energy crisis had not intervened. That figure has since been reduced to as low as 2.8 million units per quarter, meaning a loss of up to 6.8 million vehicles on an annual basis.

 

S&P’s forecast looked at 11 major car production hubs across Europe and ranked them according to which countries are best positioned to endure the expected energy crunch.

 

The news comes just months after industry analysts warned of a ‘perfect storm’ in vehicle production owing to soaring inflation and interest rates, high raw material and energy costs, and lingering effects from the COVID-19 pandemic, including the much-publicised microprocessor shortage.

 

Focused primarily on production within the European Union, economic analysts cautioned that earning declines and reduced production would be further impacted by uncertainties surrounding energy security in the region.

 

The news means customers may face extended wait times for vehicles or accept de-specified equipment preferences to receive their vehicle on time.

 

It’s a scenario that has played out repeatedly over the duration of the COVID-19 pandemic and one it seems is far from over.

 

As recently as this week Toyota Australia said it was still enduring production issues with models including the GR86, LandCruiser and RAV4 the subject of extended wait times for its customers.

 

Customers with questions surround the arrival of their vehicle are urged to contact their local or preferred dealership directly.

 

With Bloomberg