Auto sales in Europe rose in April for a ninth month as supply chains improved and carmakers worked through backlogs of orders.

New-car registrations increased 16% to 964,932, the European Automobile Manufacturers’ Association said Wednesday. While the recovery continues, deliveries during the first four months of the year remain roughly a fifth below pre-pandemic levels.

Carmakers across the volume, premium and luxury segments have continued to post strong results even as inflation remains elevated and concerns about the economic outlook deepen. But with supply chains improving and more vehicles coming to market, the manufacturers are set to lose pricing power, and investors are signaling tougher times are ahead.

“There is likely to be a lot of instability in the next 12 months as new electric models try to gain traction and Tesla continues to add pressure,” said Felipe Munoz, senior analyst at JATO Dynamics. “There are threats to growth coming as a result of inflationary and geo-political pressures, and if you include the price war, many customers are likely to delay their purchases.”

On top of that, European officials raised their inflation outlook this week, and higher interest rates have already made financing a vehicle more expensive. Tesla Inc.’s price cuts have added to the sales stress, putting carmakers under pressure to reduce sticker prices and sacrifice the strong margins they enjoyed by focusing on more expensive models during the chip-supply crisis.

Fully electric vehicles saw a nearly 50% increase in registrations compared to April last year, while sales of gas-fueled cars rose by 15%. Orders for diesel-powered vehicles declined slightly.