These are not good times for vehicle manufacturing. At least that’s what they say statistics produced by the sector itself at the national level, which in its latest activity balance draws a downward first quarter, with a much lower production volume than it registered before the pandemic. So much so, in fact, that it marks the worst start to the year since COVID-19 made an appearance and began to complicate the scenario for manufacturers.
The context of course he’s not making it easy.
As if it were a series of catastrophic misfortunes, over the last two years one challenge after another has followed one another: the pandemic, the semiconductor crisisproblems in the supply chain aggravated in turn by the war in Ukraine and, as a final touch, the carriers’ strike that tarnished the result in March.
What do the figures say? That the level of production in the sector is at low levels. If it is compared with the data that it handled before the pandemic, of course; but also if those of a year ago are analyzed. According to the tables prepared by Anfac (National Association of Automobile and Truck Manufacturers), throughout the first quarter of the year, Spanish companies dispatched 550,454 vehicles, 16.9% less than during the same period in 2021.
The data does not improve if we look at the last month of the quarter, March. With 181,401 units, the decrease was in that case even more pronounced: 20.1% less than in 2021. The worst balance, however, is shown by the comparison with 2019, the last year free of the “COVID-19 effect” and in the what Anfac itself identified still a “natural production rate”. During the start of 2022, Spanish manufacturers shipped nearly 200,000 units less than three years ago, which, in percentage terms, represents a considerable setback of 25%.
Was all the production data bad? The main ones yes, at least. The statistics of Anfac show that they have fallen far short of those managed by the sector just a year ago. Of course, the setbacks were not equally pronounced on all fronts.
The manufacture of passenger cars, for example, fell by 10.6% in March, a more than significant decrease that left the production figure at 152,705 units. It is a considerable “prick”; but very far from the collapse of 48.8% noted in the manufacture of commercial and industrial vehicles.
Things change when analyzing what Anfac calls “alternative vehicles”, a category that includes electric vehicles, plug-in and non-plug-in hybrids, LPG and natural gas. Throughout March, the employers manufactured 23,081 units, 15.6% more than during the same month of 2021.
What is the reason that the industry does not raise its head? reason no. Reasons. The employer points out several that are making recovery difficult for him. The main ones: the component crisis and the problems in the supply chain itself, aggravated by the war in Ukraine.
“The international uncertainty caused by the war in Ukraine together with the crisis of microchips and components are conditioning the pace of production centers and the demand from foreign markets. These factors are going to significantly mark the evolution and recovery marked for this year”, points José López-TafallCEO of Anfac.
Beyond the speech, the data show a slow recovery of the international market. In March, shipments to other European countries fell by 22.3% compared to 2021 and orders from Turkey experienced a resounding “puncture” of almost 40%.
And to put the finishing touch… …Well, to put the finishing touch to the quarter: carrier strike. If the restrictions that COVID, uncertainty, war and shortages still mark were not enough in themselves to complicate the work of manufacturers, the quarter closed with another important challenge: the transporters’ strike, which had an impact considerable in the manufacturing rate of the factories and curtailed their production and export capacity.
“The environment of international uncertainty together with the temporary stoppages caused by carrier strikes have been key aspects that joined the slow recovery of the main European markets that set the pace for vehicle exports”, reflect.
So all the data is negative? No. And that’s probably the key. Although the production statistics show a drop compared to 2019 and even 2021, the truth is that fewer cars do not have to mean less turnover or less profit. Some days ago the Stellantis consortium published that between January and March entered 41,500 million euros, 12% more than during the same period in 2021. And that despite the drop in sales, also 12%.
He wasn’t the only one. During the first three months of 2021 Volkswagen delivered 1.89 million vehicles and manufactured two million, which represents setbacks of 21.9 and 11.9%, respectively. Does that mean that their income fell to the same extent? Not at all. The company kept its billing level stable and improved its operating result by 73%. The balance of benefits was also more than positive for the BMW group either KIA.
And how could that be possible? If what complicates production for companies is a combination of factors, what allows them to raise their billings in the midst of a drop in activity is also a cocktail of elements. Reasons cited by companies include “solid net prices”currency conversion, the increase in electric vehicle (EV) deliveries—it’s interesting the case of mercedes-, the “cost discipline” or “flexibility”.
Regardless of these factors, the truth is that the CPI data clearly shows that the price of vehicles is growing. And at a good pace, too. In March it was recorded a year-on-year rise of 5%the highest figure since March 1996. In February we had already scored 4.7%. The key, after all, may be that selling less and getting more expensive is profitable.