Consumer demand is expected to keep the auto industry on track to grow at 7-9pc this year, despite the persisting semiconductor chips shortage, according to ING, which kept its growth forecast unchanged for this industry.
In an update posted on Friday, ING noted that the chip shortage is unlikely to have a long-term impact on the passenger car sector after sales in this segment grew in the first half of 2021.
Citing figures from the European Automobile Manufacturers’ Association (ACEA) in H1 2021, ING indicated that demand for new cars in the EU increased by 25.2pc compared to H1 2020 despite a 21.7pc drop in registrations in the same annual period under comparison.
Still, ING expects supply chain issues, especially those related to semiconductor chips, to persist through the rest of the year. As a result, demand is expected to outpace supply even in the second half of the year as production remains subdued due to this issue. On the other hand, TSMC, the world’s largest semiconductor chips manufacturer plans to increase its output by 60pc annually this year, which may relieve some pressure on the supply chain, ING noted.
The financial firm expects supply chain issues to remain a short-term phenomenon despite a noticeable impact on the annual production and sales of carmakers.
The increasing popularity of electric vehicles is also expected to drive the auto industry’s sales this year, ING noted. The European financial firm noted that the share of EVs in new car sales is estimated to increase by 50pc to 6pc in 2021 before ramping up to 8pc of total car sales by 2022. Europe is expected to continue leading EV sales followed by China.