As the EU automotive industry grapples with profound challenges, recent figures indicate a continued slowdown in the car market, compounding the existing difficulties. In September 2024, the EU registered 809,163 new cars, reflecting a 6.1% decline in new registrations compared to the same month in the previous year, according to the European Automobile Manufacturers' Association (ACEA). This downturn was particularly pronounced in the continent's three largest car markets: France (-11.1%), Italy (-10.7%), and Germany (-7%). While Spain, the EU's fourth largest market, showed a glimmer of hope with a 6.3% increase in registrations, the overall trend paints a troubling picture for the automotive sector.
This decline in car registrations occurs within a broader context of diminishing sales of electric vehicles (EVs), with a reported 5.8% reduction in battery electric vehicle registrations during the first nine months of 2024. The market dynamics have shifted dramatically, as the EU grapples with an overall increase in new car registrations of just 0.6% for the same period, totalling 7,989,776 vehicles. This marginal growth was driven predominantly by a notable 20.1% surge in hybrid electric vehicle registrations, which rose to 2,404,532. The popularity of hybrids has helped counterbalance the declines in other segments, including battery electric vehicles, plug-in hybrids, petrol, and diesel cars.
The EU automotive sector, which employs 13.8 million people and contributes 8% to the European manufacturing value added, is experiencing seismic shifts due to the pressing demands of the green transition, digitalisation, and fierce global competition, particularly from China. As the EU moves toward a regulatory requirement that mandates all new vehicles to be zero-emission by 2035, the industry's adaptation is urgent. European manufacturers are currently facing significant hurdles in electric vehicle innovation, primarily due to the high costs of lithium-ion batteries. Alarmingly, only one of the world's top 15 battery electric vehicles is produced in the EU, highlighting the region's lag in this critical market segment.
Among the automakers, Stellantis—a conglomerate that encompasses brands such as Peugeot, Citroen, and Alfa Romeo—has been hit hardest, with a staggering 27.1% drop in registrations year-over-year, totalling 120,582 in September. In contrast, Volkswagen has managed to maintain its position as the EU's top carmaker, reporting a slight increase of 0.3% in new registrations, reaching 216,577 and commanding a market share of 26.8%. Renault, another major player, experienced a modest decline of 1.8% in September, selling 100,613 vehicles, while BMW reported a 5.1% uptick, with 81,909 registrations.
The automotive industry’s economic relevance differs widely across EU regions, with some countries like Slovakia, Romania, and Germany relying heavily on this sector. The industry’s complex network of supply chains, involving many specialised small and medium-sized enterprises, further underscores the importance of a robust automotive ecosystem.To combat these challenges, industry leaders have advocated for a comprehensive EU industrial strategy focused on reducing production costs, enhancing automation, and investing in innovative technologies. The recent Draghi Report emphasises the need for a specific EU industrial action plan for the automotive sector, covering all stages of the value chain. Recommendations include supporting projects of common European interest in areas such as affordable electric vehicles and circular economy practices.
Moreover, as the EU faces the dual pressures of high energy costs and competition from Chinese firms, who are increasingly becoming significant players in the EV market, collaboration with Chinese companies is increasingly seen as a viable strategy for European manufacturers. Partnerships, such as Volkswagen’s with Xpeng and Stellantis’s with Leapmotor, exemplify how cross-border collaboration could help European firms navigate the rapidly evolving automotive landscape.
As the industry navigates these turbulent waters, it faces a critical juncture that demands swift adaptation. The need to embrace innovation, streamline operations, and foster collaborative approaches has never been more pressing. With proactive measures and a commitment to transformation, the EU automotive sector can potentially not only survive but thrive in the face of unprecedented challenges. The road ahead is riddled with difficulties, but the opportunity to reshape the automotive landscape remains within reach.