Europe's car production could slump by 40%, blame it on the energy crisis

Europe's energy crisis could massively dent the continent's car production in the coming days. This could result in European car production slumping by nearly 40 per cent or more than one million vehicles per quarter through the end of 2023, claims S&P Global Mobility on Tuesday in its forecast. The report claims that the auto industry's supply chain, which is already reeling under the pressure o Covid-19 pandemic and the Russia-Ukraine war, may face extensive impact from soaring energy costs or even power cuts in the continent.

The report further forecasted that with energy prices in Europe skyrocketing, a harsh winter could place certain automotive sectors a risk of being unable to keep their production lines running. The report states that costs for car production have already escalated between 687 euros and 773 euros per vehicle in the continent, which is a significant rise from a pre-energy crisis level of 50 euros. This has been putting a major strain on smaller suppliers of components and technology.

The report has further forecasted that starting this quarter through the end of 2023, quarterly production from European car assembly plants would be between four million and 4.5 million units. However, with potential utility restrictions, that volume could be cut to as little as 2.75 million units to three million units per quarter.

The bigger worry for the global auto industry is that this crisis will dent all the automakers' production volume worldwide, as European suppliers export parts around the world to almost every automaker.

Speaking about this, Edwin Pope, principal analyst for materials and lightweighting at S&P Global Mobility, told Reuters that there are events that will inevitably shift the scales towards he lower end o what was predicted previously, especially in terms of how long it would take to repair things of this nature.

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