Economic unrest threatens the revival of European auto sales.

While a worsening economic prognosis suggests that harsher times are ahead, European new car sales increased for a second month in September on the back of improved supply-chain issues.

According to the European Automobile Manufacturers’ Association, automakers in the EU, EFTA, and UK delivered 1.05 million automobiles in total last month, an increase of 7.9% from a year ago. The improvement builds on August’s figures, which showed the sector’s first growth in more than a year.

Source: Bloomberg

Even if deliveries are increasing, sales are still much below than they were in 2019, the year before the epidemic, as automakers continue to face challenges including chip shortages and the energy crises. While issues with the supply chain are getting better, a recovery is still in danger due to escalating inflation and a dimming economic outlook.

According to analysts surveyed by Bloomberg, the euro bloc’s economic production would decline by 0.1% in 2023 against earlier predictions of 0.3% increase. The biggest economy in the region, Germany, is predicted to shrink by 0.5%, while France, Italy, and Spain are predicted to grow.

The European Central Bank increased interest rates by 75 basis points last month, following a 50 point increase in July. The ECB has been criticized for acting too slowly to combat record-high inflation in the eurozone. In an effort to “dampen demand,” the ECB said at the time that it anticipated further rate increases.


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