An employee of the Volkswagen plant in Zwickau stands next to the VW logo on the factory premises during an information event organised by the Works Council of Volkswagen Saxony in Zwickau, eastern Germany, on October 28, 2024.
Jens Schlueter | Afp | Getty Images
A perfect storm of challenges for the European automobile industry shows no sign of letting up, analysts say.
Automakers have struggled to come to terms with a series of headwinds on the road to full electrification, including a lack of affordable models, a slower-than-anticipated rollout of charging points, intense competition from China, tougher carbon regulations and the prospect of targeted U.S. tariffs.
It is against this backdrop, analysts say, that the industry will be bracing for a bumpy ride next year.
Julia Poliscanova, senior director for vehicles and e-mobility supply chains at the campaign group Transport & Environment, described the outlook for European automakers as “quite bleak.”
“They are behind on electrification, their products are just not as good as the formidable Chinese competition – and that is not anyone’s fault but the carmakers,” Poliscanova told CNBC via video call.
Poliscanova highlighted the fact that car sales in Europe remain below pre-Covid-19 levels as the industry continues its struggle with getting to grips with higher interest rates.
Some of Europe’s original equipment manufacturers (OEMs) have expressed concern about the next tightening of carbon regulations, particularly as electric vehicle demand falters.
The European Union’s cap on average emissions from new vehicles sales is poised to fall to 93.6 grams of CO2 per kilometer (g/km) from next year, reflecting a 15% decrease from a 2021 baseline of 110.1 g/km.
Exceeding those limits — which were agreed in 2019 and form part of the 27-nation bloc’s ambition to reach climate neutrality by 2050 — can result in hefty fines.
The European Automobile Manufacturers’ Association, or ACEA, has called on the EU to ease the 2025 compliance costs “while keeping the green mobility transformation firmly on track.”
The car lobby group, which represents the likes of BMW, Ferrari, Renault, Volkswagen and Volvo, said in late November that action is necessary to further support the industry, citing sluggish EV demand and a deteriorating economic climate.
A European Commission spokesperson was not immediately available to comment on calls to provide regulatory relief to carmakers. An EU spokesperson previously told CNBC that the bloc’s executive arm is “sensitive to the challenges that are being faced” by the industry.
Mercedes, BMW, Stellantis and Renault — have broadly plummeted this year, although France’s Renault is a notable exception.
From a financial perspective I’m not expecting much improvement at this point.
Rico Luman
Senior sector economist for transport and logistics at ING
Milan-listed Stellantis has led the losses, down 37% year-to-date, with Germany’s crisis-stricken Volkswagen falling 23% and Munich-headquartered BMW tumbling 21% over the same period.
Renault, meanwhile, has notched gains of 19% amid hopes the carmaker might fare better than its rivals due to its relatively limited exposure to China and U.S. markets.
unveiled a flurry of low-cost EVs at the Paris Motor Show in October, seeking to jump-start a demand slump and recapture some of the market share now held by Chinese brands.
It was hoped at the time that the new models could represent a turning point for the region’s auto industry.
