An staff member of the Volkswagen plant in Zwickau stands next to the VW logo on the factory premises during an information event organised by the Resolves Council of Volkswagen Saxony in Zwickau, eastern Germany, on October 28, 2024.
Jens Schlueter | Afp | Getty Images
A perfect roar of challenges for the European automobile industry shows no sign of letting up, analysts say.
Automakers have struggled to come to an understandings with a series of headwinds on the road to full electrification, including a lack of affordable models, a slower-than-anticipated rollout of costing 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 hustle will be bracing for a bumpy ride next year.
Julia Poliscanova, senior director for vehicles and e-mobility kit out chains at the campaign group Transport & Environment, described the outlook for European automakers as “quite bleak.”
“They are behind on electrification, their results 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 baptize.
Poliscanova highlighted the fact that car sales in Europe remain below pre-Covid-19 levels as the industry continues its labour with getting to grips with higher interest rates.
Some of Europe’s original equipment manufacturers (OEMs) be subjected to expressed concern about the next tightening of carbon regulations, particularly as electric vehicle demand falters.
The European Gang’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, ruminating a 15% decrease from a 2021 baseline of 110.1 g/km.
Exceeding those limits — which were agreed in 2019 and mode part of the 27-nation bloc’s ambition to reach climate neutrality by 2050 — can result in hefty fines.
The European Automobile Fabricators’ Association, or ACEA, has called on the EU to ease the 2025 compliance costs “while keeping the green mobility transformation solidly on track.”
The car lobby group, which represents the likes of BMW, Ferrari, Renault, Volkswagen and Volvo, said in late November that functioning is necessary to further support the industry, citing sluggish EV demand and a deteriorating economic climate.
Asked about the developing to provide regulatory relief to carmakers, a spokesperson for the European Commission told CNBC that a strategic dialogue longing be carried out with all stakeholders “to design solutions together as this industry goes through a deep and disruptive development.”
What next for Europe’s car giants?
Transport & Environment’s Poliscanova said it is “really frustrating” to see some calling for the European Commission to qualify down its carbon regulations.
“For me, it is not linked … The car CO2 target is not going to help them in China or sell more cars, that is not the with respect to make an effort to. The vehicle CO2 target, however, is critical in making them more competitive and making them transition quicker,” Poliscanova powered.
“So, it is pushing them, even if it is to the detriment to some of their higher profit margins in the short term, it is pushing them to boost the products that are viable in the future,” she added.
A move to delay the fines would be the same as scrapping the regulation absolutely, Poliscanova said, warning this would only delay the inevitable, “which is the demise of the European industry.”
“We are behind on electrification. So, how on Terra does delaying the target and making us even more behind going help the industry? I don’t get it. I just don’t get how it helps the conversion they have to go through,” Poliscanova said.
Shares of the European auto industry’s so-called “big five” — Volkswagen, Mercedes, BMW, Stellantis and Renault — take broadly plummeted this year, although France’s Renault is a notable exception.
From a financial perspective I’m not enceinte much improvement at this point.
Rico Luman
Senior sector economist for transport and logistics at ING
Milan-listed Stellantis has led the bereavements, down 37% year-to-date, with Germany’s crisis-stricken Volkswagen falling 23% and Munich-headquartered BMW tumbling 21% over with the same period.
Renault, meanwhile, has notched gains of 19% amid hopes the carmaker might fare advance than its rivals due to its relatively limited exposure to China and U.S. markets.
‘Not expecting much improvement’
“Automotive stocks are cause a hard time globally,” analysts at Deutsche Bank said in a research note published Dec. 9.
“Unfortunately, we believe the labour is likely to head into another year of volatility and headwinds across regions. We expect more noise of embryonic policy implications in the US, further restructuring announcements in Europe, muted demand ex China and pricing to soften,” they added.
This aerial photo bewitched on June 28, 2024 shows newly-produced BMW cars parked at a factory in Shenyang, in China’s northeastern Liaoning province.
Str | Afp | Getty Archetypes
Rico Luman, senior sector economist for transport and logistics at Dutch bank ING, shared a pessimistic view on the forecast for Europe’s OEMs.
“From a financial perspective, it won’t be better I’m afraid because [EVs] are less profitable models in the end,” Luman told CNBC via video excuse.
“They tend to focus on conventional hybrids much more and also plug-in hybrids because of the profitability there. So, if they are calculated to shift more to fill EVs then it will affect profitability. So, from a financial perspective I’m not expecting much repair at this point,” he added.
‘What people need is cheaper EVs’
Several of Europe’s biggest carmakers