Good news for the car industry: what happens to sales

A modest recovery is expected, the LMC analysis firm said, but the impact of the chip deficit will persist until the third quarter.

Global car sales will improve somewhat in 2022, analysis firm LMC Automotive said, but the shortfall in semiconductor supplies will continue to narrow production until at least the third quarter.

Overall, light vehicle sales are projected to increase by 6% to 85 million, CEO Pete Kelly said during the annual LMC sales and production forecast event.

Earnings will be evenly distributed across the region, LMC said. Sales in Europe will increase by 7% to 17.8 million; North America 6 percent to 18.7 million; China 5 percent to 26.6 million; South America 9 percent to 3.6 million; and the rest of Asia, including India, 7% to 15.3 million.

“We expect to see Europe do a little better in terms of last year’s recovery, given how weak it was last year,” when sales rose just 0.5%, Kelly said.

When production returns to normal

Compared to pre-pandemic levels in 2019, production will fall by 12% in the first quarter, by 5% in the second and steady in the third quarter. A recovery will accumulate in the fourth quarter, when it will increase by 4% compared to 2019.

The total shutdowns attributed to chip shortages are expected to end in the second quarter of this year, with production disruptions remaining linked to slower production, LMC said. However, about 4.8 million production units will be lost in 2022.

“We will not get rid of the chip deficit this year, but the volume of interruptions seems to be in the range of half compared to last year,” said Kelly.

Total production will return to 2019 levels in 2023, when the LMC estimates a volume of 90.2 million vehicles, although production could exceed 93 million depending on risk factors.

“Demand far exceeds demand in the global automotive sector, but it is particularly acute in mature markets and is something that will persist for a while,” said Kelly. “I saw this show in terms of stock levels.”