Is automotive branch getting better after months of supply chain issues and chips shortage? HFM Analyst talks Toyota, Volkswagen and BMW earnings
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For many months now it's been terribly hard for anybody to order a car you really want with every selected features. Supply chain issues and chips shortage made it a big challendge for automotive branch to produce cars effectively and sell them for a reasonable price. That's why we ask HF Markets analyst, Marco Turatti about the industry state and earnings of Toyota, VW and BMW.
FXMAG.COM: Is automotive branch getting better after months of supply chain issues and chips shortage? Please comment on Toyota, VW and BMW earnings.
Marco Turatti (HF Markets): In 2023, a fairly strong global automotive market is expected, with global production growth of 3% thanks to a more stable supply chain (as well as more stable raw material prices). That is according to JPMorgan, at least. The supply side of semiconductors started to improve in 2022 thanks to an increase in productive capacity at the same time that a decline in sales in the consumer electronics sector allowed resources to be shifted towards the automotive market (as happened in Taiwan), which is in full swing due to the transition to electric. However, the fact that cars are using increasingly powerful and specific chips could give rise to new bottlenecks towards the end of the year that are expected to be fairly minor.
Marco Turatti (HF Markets): The renewed availability of productive factors will unleash competition worldwide but especially on the Chinese market, the largest in the world (and where 'small' local producers are eating up market shares); at the same time it is expected that demand may slacken mainly in Europe (according to BMW).
Toyota plans to multiply its production of purely electric vehicles (non-hybrid) by 5 to 202,000 units before March 2024
Marco Turatti (HF Markets): Looking at TOYOTA, which was the last to present results on 10/05, it plans to multiply its production of purely electric vehicles (non-hybrid) by 5 to 202,000 units before March 2024. VOLKSWAGEN will try to recover the lost market share in the Asian giant (sales -14%, offset by good data in the EU and the US), focusing however on maintaining positive margins as close as possible to 8% as they are for the traditional combustion engine segment: therefore, the focus will not be on volumes or price reductions. This low margin stress situation was more pronounced for European producers, where supply chain problems were felt more than in other areas in 2022: for example, BMW also adopted a pricing strategy opposite to Tesla's, raising prices on average. Revenues increased by 28% ($142.6B) while earnings registered +12%, less than what analysts expected.
Marco Turatti (HF Markets): In any case, everything points to a healthy 2023 for the automotive market and a competition that is once again more intense due to the full availability of productive factors.
