EU carmakers to face multiple challenges in 2019

The European automobile industry is set to face some “… fundamental challenges” this year. Registration growth is set to stall and carmakers will need to adapt to a fast-changing environment, ACEA, the European carmakers association says. A lowering of registrations will have a negative effect on production, Kallanish notes.

Among the looming challenges for the market ACEA includes a no-deal Brexit, US tariffs on car imports and the need to meet stringent CO emission targets for new vehicles.

Last year EU car registrations increased only 0.1% year-on-year, reaching 15.2 million units. Although this represented the fifth consecutive year of growth, the pace of this has been falling steeply from the 9.3% y-o-y increase seen in 2015. For 2019 the expectation is for the market to stagnate at a similar level to that seen in 2018.

On the political front, Brexit remains a concern, especially if the UK leaves the EU without a deal. “Regarding the operations of the auto industry in the UK, manufacturers are now being forced to take drastic contingency measures. Some are looking for warehouse space to stockpile parts, others are planning a temporary production shutdown after Brexit, and some car makers are even cutting back their investments in the UK,” ACEA said. “Recent figures show that investment in the UK car industry fell by -50% in 2018.”

Another issue will be the threat of US tariffs on EU cars and components. ACEA continues to maintain that no threat exists for EU imports of car parts into the US. it also indicates however that any retaliation by the EU to US measures would confirm the concern of an escalations despite the fact that “… the industry thrives best in an environment without trade barriers”.

ACEA also believes that the challenges to meet the targets imposed the EU for the reduction of CO2 emissions by cars will be difficult to meet. The problems related to diesel engines have increased the share of petrol cars in the mix, emitting more CO2. “First indications suggest that 2018 was the second year in a row where CO2 emissions from new cars actually increased,” ACEA said.

The solution for carmakers remains the continued development of electric cars. Any increase in market share for these will need substantial support from European lawmakers due to the need to reorganise production with the consequential increase in costs for the vehicles.