Europe sales up 16% in April as output improves on better supply chains

New-car sales in Europe rose in April for a ninth month as supply chains improved and automakers worked through backlogs of orders.

Registrations in the EU, EFTA and U.K. markets jumped 16 percent last month to 964,932, the European automakers’ lobbying group ACEA said on Wednesday in a statement.

While the recovery continues, deliveries during the first four months of the year remain roughly a fifth below pre-pandemic levels.

Automakers across the volume, premium and luxury segments have continued to post strong results even as inflation remains elevated and concerns about the economic outlook deepen.

But with supply chains improving and more vehicles coming to market, the manufacturers are set to lose pricing power, and investors are signaling tougher times are ahead.

“There is likely to be a lot of instability in the next 12 months as new electric models try to gain traction and Tesla continues to add pressure,” said Felipe Munoz, senior analyst at JATO Dynamics.

“There are threats to growth coming as a result of inflationary and geo-political pressures, and if you include the price war, many customers are likely to delay their purchases.”

On top of that, European officials raised their inflation outlook this week, and higher interest rates have already made financing a vehicle more expensive.

Tesla price cuts have added to the sales stress, putting automakers under pressure to reduce sticker prices and sacrifice the strong margins they enjoyed by focusing on more expensive models during the chip-supply crisis.

Full-electric vehicles saw a nearly 50 percent increase in registrations compared to April last year, while sales of gasoline-fueled cars rose by 15 percent.
Orders for diesel-powered vehicles declined by nearly 1 percent.