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Automakers are getting nervous about Europe's economy

Carmakers BMW and Stellantis on Thursday expressed concerns about Europe's economic outlook, joining a chorus of retailers and others in warning of waning consumer confidence on the continent and hitting their shares. "Obviously the macro(-economic situation) in Europe is more challenging, which gives me pause, personally," Stellantis chief financial officer Richard Palmer said on a conference call with analysts. "If there was anywhere where I was more concerned, it would be Europe than anywhere else really based on the macro." This follows a dire assessment of consumer sentiment in Europe from the likes of consumer goods company Unilever and news of lower spending by Europeans from Amazon. Like other major auto companies, Stellantis and BMW have been hit by supply chain disruptions stemming from the global coronavirus pandemic that have curtailed car production. They have also benefited from strong consumer demand amid low vehicle supply, allowing them to raise prices and keep them high even as the semiconductor shortage shows signs of easing. BMW posted a 35.3% jump in third-quarter revenue despite a small drop in vehicle sales. Stellantis said its revenue rose 29% on the back of a 13% increase in vehicle sales as more semiconductors became available. The concern among analysts has been that demand may falter, just as carmakers get their hands on the supplies they need, undermining pricing and hurting profits. But this week Ferrari said it was confident about its prospects for this year and 2023 as demand for its luxury cars, as well its pricing power, remained strong. Both BMW and Stellantis said on Thursday they had vehicle order books that stretched into the second quarter of 2023. But BMW's chief financial officer Nicolas Peter said high inflation and rising interest rates could hit buyers' wallets. "This is causing conditions for consumers to deteriorate, which will affect their behaviour in the coming months," he said. "We therefore continue to expect our higher-than-average order books to normalise, especially in Europe." He added customers had been unhappy about the wait for new cars, so "a slight reduction (in orders) would not be negative." Palmer said Stellantis was "ready for any softness in demand" but in the short term had been affected by a shortage of drivers to deliver its cars to dealers. "At the moment, we can't build enough cars," he said.

As US exports top 2 million, is America becoming the world's source of cheap cars?

North American auto production is booming with 2014 figures just shy of the of the 17.3-million vehicle record set in 2000. With more models being built on the continent, even more are being shipped overseas. Factories in the US exported 2.1 million cars last year – the highest number ever. About half of those went to Canada and Mexico, but more than ever have been heading to places like the Middle East and China. The upswing comes in part from from after-effects from the Great Recession, according to The Wall Street Journal. With a weak dollar and lower production costs after the financial crisis, building vehicles in the US was relatively cheaper and more competitive in the world. At the same time buyers around the world are going crazy for crossovers. According to the WSJ, BMW and Mercedes-Benz are already exporting the majority of their US production of these models overseas. Both automakers have also announced investments to expand production further here to send more vehicles abroad. Even Honda has been shipping more models out of the country than it imported here. There is a concern this international strength could start slowing because the dollar is strengthening against other currencies, though it's too early to know what the actual effect of this could be, according to the WSJ. "Of course, we closely watch currency exchange, but we don't make changes in production or allocation based on temporary fluctuations in the exchange rate," Ford North American boss Joe Hinrichs told the newspaper. Related Video: News Source: The Wall Street Journal - sub. req.Image Credit: BMW Plants/Manufacturing BMW Ford Honda Mercedes-Benz exports us auto production

BMW M models will stay rear-wheel drive as long as possible

Don't expect BMW's M cars to go soft any time soon. Carsten Pries, the division's head of product management, wants to focus on at least six cylinders and rear-wheel drive for as long as possible. Pries sees the combination of six (or more) cylinders and rear-wheel drive as defining features of the division. "These are cars that attract new people to the M brand and that is very important," he said to Motoring. He doesn't think it's time to deviate from that strategy yet. "I hope not, because six is part of our DNA. Not only the power, but that hallmark sound that we have." We certainly like Pries' sentiment, but the division's current lineup shows a willingness to compromise the purely rear-wheel drive focus when necessary. For example, the latest X5 M and X6 M already feature all-wheel drive systems, which can send 100 percent of the power to the back at times. Spy shots and rumors heavily suggest a similar option for the next-generation M5, too. The latest M4 GTS proves BMW knows how to tune a fantastic sounding six-cylinder, but there's no reason a well engineered four-cylinder model couldn't be great. The original M3 relied on one to speed around, and it became a performance icon of its period. Pries even admitted in 2014 that a new four-cylinder M vehicle could happen eventually. For now, he isn't ready to introduce a new four-pot model. Pries admits that the division's strategy might need to change someday, but he still expects to create M-badged models. "If the framework changes in the future, we have to look then at what we can do in terms of a proper or decent M offer," he said to Motoring. Related Video: