AUTOMOTIVE SECTOR - SUMMARY OF THE PROBLEMS OCCURED FROM 2020

I would like to understand better what is causing this slowdown in the car industry. it is persisting since the start of the covid, and continuing also now. during it, many incentives have been erogated around the world. Many investments have been done. Now, also the interest rates are going down. We spoke in the past also about interruptions in the supply chain, but now it seems that situation is improving. Market of vehicle, anyway, is not. what is going on since 2020 that is causing a slow down as the one happenin gnow?

Factors Contributing to the Automotive Industry Slowdown

• The persistent slowdown in the automotive industry since the start of the COVID-19 pandemic can be attributed to several interconnected factors:

1. Supply Chain Disruptions:

• Ongoing semiconductor shortages: These have been a major bottleneck, impacting the production of various electronic components used in vehicles.

• Logistics challenges: The pandemic disrupted global supply chains, leading to delays in the delivery of raw materials and components.

2. Economic Uncertainty:

• Consumer confidence: Global economic uncertainties, including inflation and geopolitical tensions, have made consumers more cautious about making large purchases like cars.

• Rising interest rates: Higher interest rates can increase the cost of financing a car, discouraging purchases.

3. Shifting Consumer Preferences:

• Electric vehicle adoption: The growing popularity of electric vehicles has led to increased demand for batteries and other components, which can strain supply chains.

• Shared mobility services: Ride-sharing and car-sharing services have become more prevalent, reducing the need for personal vehicle ownership.

4. Geopolitical Factors:

• Trade tensions: Trade disputes between major economies can disrupt supply chains and increase costs for automakers.

• Regional conflicts: Conflicts can disrupt production and transportation in certain regions.

5. Inventory Adjustments:

• Overstocking: Automakers may have overstocked inventory during the pandemic to meet anticipated demand, which can lead to production cuts to reduce excess supply.

• While some of these factors have been improving, such as supply chain disruptions and interest rate declines, their combined impact has continued to weigh on the automotive industry. The industry is also facing the challenge of transitioning to a more electric and autonomous future, which requires significant investments and technological advancements.

is it still ture that it is necessary to wait up to 6 or 7 months to have a car, when bought new ?

The wait times for new cars have been improving in recent months. While there may still be some variations depending on the specific model, manufacturer, and region, the overall trend is toward shorter delivery times compared to the peak of the semiconductor shortage. Factors contributing to this improvement include:

• Easing semiconductor shortages: The supply of semiconductors has been stabilizing, allowing automakers to increase production.

• Inventory adjustments: Automakers have been working to reduce excess inventory, which can lead to shorter wait times.

• Increased production capacity: Some manufacturers have expanded their production capacity to meet demand.

is it true that the slow down has been a consequence of all the factors that are mentioned in this discussion, but now the car market slow down is becoming a cause of a further slow down in the economy, or not ?

Yes, the slowdown in the automotive industry has been a contributing factor to the broader economic slowdown.

Here's how:

• Job losses: The automotive industry is a major employer, and a decline in production can lead to job losses, which can reduce consumer spending and overall economic activity.

• Impact on related industries: The automotive industry is closely linked to other sectors, such as steel, glass, and electronics. A slowdown in automotive production can negatively impact these industries as well.

• Reduced government revenue: A decline in car sales can reduce government revenue from taxes on vehicle purchases and fuel consumption.

• While the automotive industry is not the sole driver of the global economy, its slowdown can have a significant ripple effect on other sectors and contribute to the overall economic downturn.