Spain leads Europe car sales recovery as supply issues improve

Europe’s new-car sales rose for a sixth month, led by robust growth in Spain and Italy, as supply issues ease and fuel hopes for a post-pandemic rebound.

Registrations jumped 11 percent to 911,064 vehicles last month, data from the European automakers’ lobbying group, ACEA showed on Tuesday.

While shortages of semiconductors and other components are waning, automakers are now contending with inflation and slowing economies.

“Western European countries are experiencing recessionary conditions, with higher prices and interest rates squeezing real household income,” LMC Automotive said in a report this month.

Although the forecaster is expecting the first annual gain in regional car sales this year, its projection for 10.95 million deliveries is well short of 14.3 million in 2019.

Full order books are giving companies some breathing room to navigate difficult economic conditions.

After three years of declining sales, deliveries could grow 5 percent to 10 percent this year, according to Bloomberg Intelligence’s Gillian Davis and Michael Dean.

“The uncertain economic backdrop is unlikely to translate into a decline in 2023, given 2022 purchasing volume matched previous European recession lows,” the analysts said in a note this week.

Last month’s gains were particularly pronounced in Spain and Italy, where sales expanded 51 percent and 19 percent, respectively. In France, sales grew 8.8 percent and in the UK, they jumped 15 percent.

Registrations in Germany slipped 2.6 percent after legislative changes pulled sales forward to December, according to LMC Automotive.

Volkswagen Group and Renault are predicting they will grow sales on firm orders and new models that are attracting buyers.

The French automaker led gains among major European automakers with a 24 percent jump in January.

Tesla, which started production at its German factory last March, grew sales more than 11-fold to 9,469 last month, beating brands including Porsche and Land Rover.

This is the first time that ACEA included the company’s results in its monthly sales release.

While consumers remain squeezed by high inflation, the outlook for some countries is improving.

The Bundesbank now says the German economy may shrink only slightly in 2023, and the European Commission last week even predicted the region’s largest economy to eke out 0.2 percent growth, even as the European Central Bank has signaled further interest rate hikes.