The big gap in the new car market

The big gap in the new car market

The Austrian new car market recorded an increase of 5.5 percent in August - this means that the pace of growth in Austria has slowed noticeably compared to the year to date. In addition, new car sales were still 37 percent lower than in the comparable month of the pre-crisis year 2019. “The fact that we are still seeing growth at all is due, on the one hand, to the extraordinarily low level of the previous year and, on the other hand, to the still quite high order backlog,” emphasizes Axel Preiss, Head of Advanced Manufacturing & Mobility at EY Austria. Car manufacturers are still working on orders from the previous year, when the lack of parts and limited production capacities led to significant losses. But the chip shortage is now largely a thing of the past and delivery times continue to fall. Preiss expects the recovery to continue in the coming months: "We won't reach the pre-Corona level, but by the end of the year the gap to the pre-crisis level will become smaller. Then, however, the orders from the time of the chip shortage will also have been processed."

Given the current economic situation, declining purchasing power and high interest rates, Preiss is rather pessimistic about the year 2024: "The current order situation indicates weak sales development in the coming year. Then there will be a risk of overcapacity again, and then price pressure will rise again." However, in Preis's opinion, the industry cannot actually afford discounts: "The significantly increased raw material and energy prices and higher costs in the supply chain have ensured a permanently higher cost level. Nevertheless, the first volume manufacturers are already starting to stabilize sales with special financing and promotions - and these are just the harbingers of what is likely to be a broader discount battle in the coming months."

An increase of 49 percent was achieved in new registrations of electric cars in Austria. Across the EU, the electric market share rose from 11.6 to 21.0 percent compared to August 2022, surpassing the 20 percent mark for the first time, and in Austria from 14.8 to 21.0 percent. “The Europe-wide electric boom is likely to have reached its peak in August,” says Preiss. "On the one hand, Germany will no longer be a growth driver, as commercial purchases of electric cars have no longer been subsidized since September. On the other hand, we are also seeing the first signs of slowing momentum in other countries." The market is still very much driven by government subsidies - when these expire or are reduced, the momentum also collapses. Added to this is the economic weakness, which will also have an impact on the electric car market. However, Preiss also sees the industry as having a duty: "The range of cheaper electric cars must be significantly expanded. Currently, electromobility is primarily mobility for higher earners because electric cars are significantly more expensive compared to comparable combustion engines."