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Automakers see ‘warning signs’ as inflation weakens demand for new cars

BERLIN – Automakers are reporting lower demand in Europe and North America as analysts say there is growing evidence that consumers are paying higher prices and keeping money face for essential needs.

Although some luxury brands like Ferrari and Mercedes raised its sales forecast as demand continues to be high for the most premium models, the outlook for much of the industry is bleak.

Waiting times for new orders are getting shorter as order books become thinner. That’s even slower than usual production and lower deliveries than last year, executives said.

“New orders are falling” BMW car CEO Oliver Zipse said during an earnings call on Wednesday, especially in Europe.

So far, automakers have defended profits by raising prices, but sharply rising inflation in North America and Europe could make it harder to overcome rising costs.

“Demand is falling,” Volkswagen’s Chief Financial Officer Arno Antlitz said last week, though he said orders would still be full in the coming months. “The warning signs are for Europe and North America, less so for the China region.”

Inflation in Europe and the United States has spiked in recent months with central banks warning the peak could be months away, sending consumer and business sentiment plummeting.

Data from online car dealer and auction Philip Nothard, Europe director at Cox Automotive, said demand has been declining since March of this year.

“Consumers are very cautious right now,” he said.

A survey by the Munich-based Ifo Institute published on Wednesday showed that the order backlogs of German carmakers are falling and prices are expected to trend downward due to concerns about the situation. gas shortages and the continued weakness of the Chinese economy.

“The weight of buy a car on household budgets is something we’ll be up against,” Stellantis chief executive Carlos Tavares said last month.

For now, the automaker intends to pass on its own inflated costs to consumers, but this cannot last forever.

“There is a limit to the price increase,” Tavares said.

In U.S.A, Ford Chief Financial Officer John Lawler said it was considering bringing in discounts and incentives that were scrapped last year amid supply chain concerns.

“It’s a forward-acting exhaust valve,” he said.

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