this disaster scenario that threatens despite the end of the semiconductor crisis

La crise du Covid a secoué l

The end of abundance… Emmanuel Macron’s statement to the French could also ring very loudly in the ears of car manufacturers. While the latter published insolent financial results in the first half, the landing could be more brutal than expected. The Covid crisis has certainly shaken the automotive industry, before it was disrupted by the shortage of semiconductors. But the builders managed to get through these difficult years with considerable aplomb, playing sometimes on partial unemployment, sometimes on an ultra-flexible productive apparatus, or by taking advantage of a favorable imbalance between supply and demand to impose their prices. So far everything was going well, until the invasion of Ukraine by Russia last January. This time, the runaway prices of raw materials, and in particular those of energy, have changed the situation with a worrying butterfly effect.

A disrupted macroeconomic picture

Because this summer, the macroeconomic picture has completely and suddenly changed in nature compared to what was expected at the start of the year: inflation at 9% (record since the creation of the euro), the first increase in interest rates since a decade which will be followed by three others before the end of the year, deterioration of all leading indicators of consumer and industrial confidence. The forecast of an automotive market up 8% (source ACEA) over the year no longer holds.

“The semiconductor crisis is now only one of the elements inducing a risk of market contraction in a context of rising prices and falling consumer confidence. Especially since the negative evolution of the euro against the dollar is likely to increase the cost of vehicles, ”explains Guillaume Crunelle, associate director at Deloitte and specialist in the automotive industry.

For car manufacturers, this deterioration in the macroeconomic context comes at the worst time, namely the European regulatory tightening around CO2 emissions. But electric cars are getting more and more expensive. And they risk being even more so with the unfavorable exchange rate effects given the fact that most batteries are imported. Not to mention interest rates which are on an upward trend, but still remain at a very low level.

The Semiconductor Shortage Is Over

At PwC, we agree on the fact that the semiconductor crisis is soon no longer a subject. ” The shortage of semi-conductors is on the way to being absorbed. There will still be a shortage of supplies in the third quarter, but we no longer anticipate any shortages in the fourth quarter “, explains José Baghdad, partner in charge of the automotive sector at PwC France and Maghreb.

However, the inflationary context deserves to be nuanced: “ inflationary pressures in the automotive industry have become decorrelated from inflation from a macroeconomic point of view and are lower than a few months ago. There are even price reductions on certain materials “.

The Semiconductor Shortage Seems to Be Closing: Why That’s Not Necessarily Good News

Germany highly exposed to power cuts

But for José Baghdad, the real danger is expected this winter with the gas supply conditions in Europe. ” Germany is the country most exposed to this risk, and we estimate a production drop of 1.5 million cars in the last quarter, which could be repeated in the first quarter of 2023 if the situation continues. », Explains the PwC expert.

In other words, if Vladimir Putin cuts off gas to Europe (35% of German imports, 55% before the conflict with Ukraine), German car factories literally risk having their electricity cut off. For comparison, the impact of the shortage of semiconductors in Europe in 2022 represented approximately 660,000 cars. The winter promises to be very long for German car manufacturers.

These pressures on energy prices are also likely to weigh on the electric car market. ” The sharp rise in the price of electricity weakens the argument that the electric kilometer is cheaper than that of a thermal car. This is an additional difficulty for manufacturers who are strongly urged to sell more by regulators. “says Guillaume Crunelle.

“The rise in fuel prices will not necessarily favor the electric car”

But this catastrophic scenario is still only at the hypothesis stage. What is less so is the very sharp deterioration in household and industrial confidence, which is already a reality. In France, consumer confidence indicators have never been so low since 2013. But for now, the impact has not yet been assessed. There is a macroeconomic point that remains to be clarified on the behavior of consumers whose confidence rating has dropped. For the time being, the impact of a fall in demand is secured thanks to a solid order book which would make it possible to hold out for several months. observes José Baghdad.

Chinese manufacturers in ambush

” Lhe question is how long manufacturers will continue to benefit from orders placed during the semiconductor shortage. Beyond that, there is a risk of contraction in demand “Judge Guillaume Crunelle, more worried.

In the event of a drop in demand, manufacturers will lose the main lever that has allowed them to make money in recent years of crisis. They will be caught in a vice between price pressures and insufficient sales. A fantastic window of opportunity for Chinese automakers who are in ambush to flood the European market with their electric cars at bargain prices.