Eurofer revises down EU automotive outlook

European steelmakers association Eurofer has revised down its outlook for EU automotive production, saying it will contract -3.8% on-year in 2019 compared to the -1.4% forecasted in August. It is also seen rising only 0.9% in 2020 versus the previous projection of 2.2% growth.

EU automotive production fell -7.2% on-year in the second quarter. Falling demand for new passenger cars in Europe and in key export markets combined with the final reverberations of WLTP and model changes had a sharply negative impact on production activity.

In 2020 EU passenger car sales could register a modest increase as demand continues to recover from its recent lows, says Eurofer. The launch of new models – many of them electric vehicles – could be a driving force.

“However, subdued car demand from major markets such as the US, China and Turkey does not bode well for EU car exports,” the association says in a report seen by Kallanish.

“With many advanced economies being close to saturation in terms of vehicle density, the ageing population implies lower demand,” it continues. “Global demand is therefore increasingly driven by the emerging markets, but rising domestic production in these regions implies that they increasingly will be able to satisfy their domestic demand and will rely less and less on imports of cars produced elsewhere.”

It remains to be seen whether the 2.3% on-year rise in EU new passenger car sales in Q3 will hold for the remainder of the year. The fact that sales were extremely weak in Q4 2018 should provide for a mildly positive base effect.

“On balance, the outlook for the EU automotive sector remains weak. Automotive OEMs in the EU will not only have to face challenges related to the demand-side of the market, but also have to deal with approaching emissions regulation changes in both the car and commercial vehicle segments with even the threat of fines for non‐compliance,” Eurofer concludes.