An employee at the Volkswagen plant in Zwickau stands next to the Volkswagen logo at the factory headquarters during a media event organized by the Volkswagen Saxony Works Council in Zwickau, eastern Germany, on October 28, 2024.
Jens Schlueter AFP | Getty Images
Analysts say the storm of challenges facing the European auto industry shows no sign of abating.
Automakers have struggled to adapt to a series of headwinds on the road The path to full electricityincluding a lack of affordable models, a slower-than-expected rollout of charging points, Intense competition from China, Stricter carbon regulations And horizons Targeted US tariffs.
Against this backdrop, analysts say, the industry is set for a bumpy ride next year.
Julia Poleskanova, senior director of vehicle supply chains and e-mobility at the Transport and Environment Group, described the outlook for European automakers as “very bleak”.
“They are lagging behind in electrification, and their products are not as good as the massive Chinese competition — and that is no one’s fault but the automakers,” Poleskanova told CNBC via video call.
Poleskanova highlighted the fact that car sales in Europe remain below pre-Covid-19 levels as the industry continues to struggle to control high interest rates.
Some European OEMs have He expressed his concern About the upcoming tightening of carbon regulations, especially as demand for electric cars falters.
The EU cap on average emissions from new car sales is expected to fall to 93.6 grams of carbon dioxide per kilometer (g/km) from next year, reflecting a 15% decline from the 2021 baseline. 110.1 g/km.
Exceeding these limits – which were agreed in 2019 and form part of the 27-nation bloc's ambition to reach climate neutrality by 2050 – could result in hefty fines.
Association of European Automobile Manufacturers, or ACEA He called EU to ease compliance costs by 2025 “while keeping the green mobility transition firmly on track”.
An auto lobby group that represents the likes of BMW, Ferrari, Renault, Volkswagen and Volvoin late November, said the measure was necessary to further support the industry, citing slowing demand for electric vehicles and a deteriorating economic climate.
A European Commission spokesman was not immediately available to comment on the calls for regulatory assistance for carmakers. An EU spokesperson previously told CNBC that the bloc's executive arm is “sensitive to the challenges faced” by the industry.
What's next for Europe's auto giants?
Transport and Environment's Poliskanova said it was “really disappointing” to see some calling on the European Commission to relax its carbon regulations.
“For me, it's unrelated… the in-car CO2 target is not going to help them in China or sell more cars, that's not the goal. However, the in-car CO2 target is critical in making them more competitive.” And to make them turn, Poleskanova said: “Hurry.”
“So, it pushes them, even if it comes at the expense of some of their higher profit margins in the short term, it pushes them to make viable products in the future,” she added.
Poliskanova said that moving to delay the fines would be tantamount to scrapping the regulation altogether, warning that this would only delay the inevitable, “which is the demise of the European industry.”
“We're behind on electricity. So how does delaying the target and making us further behind going forward help the industry? I don't understand that. I don't understand how that helps the transition they have to go through.” “, Poleskanova said.
Shares of the so-called “Big Five” in the European automobile industry – Volkswagen, Mercedes,BMW, excellent and Renault – It has declined broadly this year, although France's Renault represents a notable exception.
Financially, I don't expect much improvement at this point.
Rico Loman
Chief Transport and Logistics Sector Economist at ING
Milan-listed Stellantis led the losses, down 37% since the beginning of the year, while German company Stellantis led the losses. Crisis-stricken Volkswagen shares fell 23% and Munich-based BMW fell 21% during the same period.
Meanwhile, Renault posted a 19% gain amid hopes that the automaker is performing better than its rivals due to its relatively limited exposure to the Chinese and US markets.
“I don't expect much improvement.”
“Auto stocks are having a tough time globally,” Deutsche Bank analysts said in a research note published Dec. 9.
“Unfortunately, we believe the industry is likely headed into another year of volatility and headwinds across the regions. We expect further noise from potential political fallout in the US, further restructuring announcements in Europe, weaker demand excluding China, and lower prices.” “. He added.
This aerial photo taken on June 28, 2024 shows newly produced BMW vehicles parked at a factory in Shenyang, northeast China's Liaoning province.
Street | AFP | Getty Images
Rico Lohmann, chief economist for transport and logistics at Dutch bank ING, expressed a pessimistic view on the outlook for European OEMs.
“Financially, it won't be better, I'm afraid (electric vehicles) are less profitable models in the end,” Lohmann told CNBC via video call.
“They tend to focus more on traditional hybrids as well as plug-in hybrids because of the profitability there. So, if they have to shift more to filling electric vehicles, it will impact profitability. So, from a financial perspective, I don't think so.” He added: “I expect a significant improvement at this stage.”
“What people need are cheaper electric cars.”
Many of Europe's largest car manufacturers It revealed a series of low-cost electric cars in Paris Motor Show in October, seeking to stimulate declining demand and regain some of the market share now held by Chinese brands.
It was hoped at the time that the new models would represent a turning point for the automotive industry in the region.
Horst Schneider, head of European auto research at Bank of America, said some leeway from European lawmakers may be needed to support automakers next year, even though companies have had years to prepare for new carbon regulations.
“Most automakers are lagging behind, with the exception of maybe BMW and Stellantis. Volkswagen has the biggest gap because it's also the largest automaker and the one with the most exposure to (internal combustion engines). Electric vehicle launches have fallen flat, sort of, but also Renault is in a position weak”. “Pressure,” Schneider told CNBC’s “Street Signs Europe” on Dec. 6.
“So, I would say that all the mass-market automakers — except for Stellantis — are under pressure, just because EV prices are still much higher than ICE prices, they're somewhere between 20% or 25%,” Schneider said.
“What people need are cheaper electric cars. They will be launched during 2025, so some automakers say there is not really a need to lower targets – but I think overall it is good to give automakers more time because the acceptance aspect is more widespread,” he added. The consumer is not there yet.
