SIGNS of an easing in the chip crisis and increased new car production are beginning to emerge with Stellantis one of the first manufacturers provide a cautious message about higher new car build numbers.

Production increases could see new car pricing come under pressure, according to Stellantis boss Carlos Tavares speaking at the group’s half year results meeting.

In a Reuters article, Tavares warned that as the chip shortage crisis abated and production increased “the pricing power of the industry will be somewhat reduced… which means you may have pressure on the margins”.

During the pandemic the shortage of microchips and other key car manufacturing components combined with high consumer demand has meant that new car prices have risen along with profit margins as discounting became almost non-existent.

Car makers have also been favouring channels that provide the most profit, effectively supply retail customers while cutting back on lower profit fleet and daily rental sales. However, Tavares, CEO of the world’s fourth largest carmaker, added that any recovery in production will be steady and slow and that Stellantis will not reach pre-pandemic production levels before the end of 2023.

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