EU car market to shrink in 2020 as challenges increase

23 January 2020

23 January 2020

Europe’s new-car market will contract for the first time in seven years in 2020, as challenges faced by the industry start to take hold.

The European Automobile Manufacturers Association (ACEA) is forecasting a fall of 2% in registrations across the continent, as the industry embarks on the transition to carbon-neutral transport, helping the EU achieve targets set out in its Green Deal.

Last year saw the market grow by 1.2%, thanks to a standout performance in December, when European sales increased by 21.7%.

Sustainable transport

‘One of the biggest drivers of change for our sector is the need to address environmental concerns,’ stated Michael Manley, ACEA President and CEO of Fiat Chrysler Automobiles (FCA). ‘The good news is that carbon-neutral road transport is possible and together – with a holistic approach – we can reach it by 2050. But that also means a lot needs to change in the next few decades.’

Manley launched the EU auto industry’s ‘10-point plan to help implement the European Green Deal’, in which the 16 major automobile manufacturers set out how CO2 emissions can be further reduced in the most effective way.

‘Firstly, we believe in choice for all,’ he added. ‘Policymakers should help drive the best possible results by remaining technology-neutral, in other words, without imposing specific technologies or banning vehicles that can still deliver CO2 reductions.’

In addition, a dense network of charging points and refuelling stations, suitable for cars and commercial vehicles, must urgently be rolled out across the EU to support the deployment of alternatively-powered vehicles. This is one of the single most important enabling conditions for achieving carbon neutrality, according to the industry.

New low-emission technologies are expensive and will remain so for the foreseeable future. To ensure that the higher prices do not slow down fleet renewal, ACEA is also calling for consistent and economically-sustainable incentive schemes for buyers of both cars and commercial vehicles.

Clean roads

‘Above all, we believe that road transport and mobility must remain affordable for everybody, regardless of where in Europe they live or their financial means,’ adds Manley. ‘Likewise, the European Commission’s Green Deal should also be used as a means to strengthen the global competitiveness of our industry.’

‘This is all the more important as we are about to face a shrinking market,’ Manley alerted. Indeed, ACEA forecasts that, after six consecutive years of growth, EU passenger car sales will drop by 2% in 2020.

‘At the very time when our industry is massively stepping up investments in zero-emission vehicles, the market is set to contract – not only in the EU but also globally – so the transition to carbon neutrality needs to be very well managed by policymakers.’

With strict CO2 targets set for 2021, and a fall in sales of diesel vehicles, which carmakers were banking on to achieve these targets, many are now rushing to develop electric vehicles, a procedure that takes a vast amount of resources and financial investment. While this is good for the environment, it is not good for manufacturers, many of whom are suffering from falling profits as a result, while workforces are also under threat.