LONDON (Reuters) - European car production estimates have been cut dramatically as the energy crisis rages on.
According to a report published by S&P Global Mobility, European car production could be down as much as 40% in Q4 as the energy crisis continues on the continent. The report points to dramatic increases in energy costs and energy rationing that may be necessary for the coming winter months.
According to S&P Global Mobility’s report, they typically expect Q4 car production in Europe to total between 4 and 4.5 million units. However, they now believe that number could be as low as 2.75 million. While the report didn’t specify how power rationing specifically affects production, S&P notes that European manufacturers already face as much as a 773 euro per car increased cost due to the crisis.
The most affected automakers will be those with most of their manufacturing on the continent, including BMW Group, Volkswagen Group, Renault Group, and Stellantis. Perhaps even more severely affected could be those brands that already produce in limited production numbers; Ferrari, Lamborghini, McLaren, or Aston Martin, to name a few examples.
More global brands will be able to shift production to keep up with demand, especially those not primarily based out of Europe; however, even these manufacturers may be influenced by dramatically lower consumer demand within Europe.
Automakers have yet to comment on shifting production out of Europe. With numerous earnings calls coming within the coming weeks, expect automakers to address how they will navigate a possible continuing supply shortage.
In legislation, the EU has made it clear that its current focus is protecting citizens from heightened energy costs. Legislation recently passed focuses on subsidizing consumer electricity, capping energy prices, and encouraging energy use reduction. It remains unclear how the EU will address manufacturers, businesses, and maintaining employment during such tumultuous times.