Auto sales growth in Europe is gradually losing steam, putting pressure on profits and forcing brands to inflate excess capacity while monitoring lockdowns.
If this isn’t enough to worry leaders when they return from vacation, the outlook for 2025 looks worse, as European Union regulations on carbon dioxide emissions require a new tightening point. More slightly successful electric cars will have to be sold. than the public needs to buy, which will lead to a decline in sales of highly successful internal combustion engine cars, which is what they want.
According to HSBC Global Research, this would mean that shareholders of Volkswagen and Renault, BMW and Volvo would possibly feel reassured.
Last year, sales in Western Europe rose 13. 9 percent to 11. 56 million, allowing sedan and SUV makers to raise prices and boost profits. These mild situations have disappeared this year and the situation will get worse.
GlobalData has been cutting its sales forecast for Western Europe. Three months ago, it forecast an expansion of just under 5%. Its most recent forecast calls for virtually no increase (a slightly measurable 0. 2%), while the total peaks at 11. 58 million. .
Western Europe includes the largest markets: Germany, France, Great Britain, Italy and Spain.
“There is a combination of anti-market activity points that are not expected to decline particularly in the near future. Interest rates remain elevated, even though the first steps have already been taken to ease financial policy,” GlobalData said in a report. .
“Vehicle costs continue to rise, although the original constraints that have led to the sharp rise in vehicle costs in recent years have faded, and show no signs of a downward primary revision in the near term. Meanwhile, the EV market is also wasting momentum. Now we expect the annual result to eclipse that of 2023,” he said.
BMI, a Fitch Solutions company, expects its sales in the overall European market to slow to a 4. 6% expansion in 2024 to 19. 3 million. In 2023, sales grew by 19. 2% as chain disruptions normalized, allowing automakers to catch up.
Investment bank UBS said the deterioration would weigh on manufacturers’ operating profit margins for the rest of 2024.
Luca De Meo, CEO of Renault (left), and Fabrice Cambolive, CEO of the Renault brand, pose with the Renault R5 E-TechArray-style electric car. [ ] (Photo via FABRICE COFFRINI/AFP Getty Images)
By 2025, HSBC Global Research estimates that the potential consequences for brands that seriously fail to meet EU emissions targets could reach a total of €5 billion; Renault has said the consequences could be doubled.
“Volvo and BMW are better positioned, while Volkswagen and Renault have a significant gap to fill,” the report says.
Laggards hope new solutions can close the gap.
“VW and Renault will enjoy a flurry of launch activity for new electric vehicles from the second half of 2024, which deserve support, but the gap to targets will bring greater focus and importance to the success of those models. “Mercedes and Stellantis are in a better position, but they are not out of the woods, especially if demand for electric vehicles continues to disappoint,” according to the report.
As part of its long-term cost-cutting plan, VW has reduced its factories and closed its factories.
The German institute IFO believes that his car is sliding into darker territory.
“A significant improvement is probably not expected in the coming months,” said Anita Woelfl, an analyst at IFO.
“Capacity utilization fell to 77. 7%, nine percentage points below the long-term average. 43. 1% of companies declare a lack of orders, compared to 29. 2% in April. No positive impulse is expected either. Export expectations fell to -16. 8 points, more than thirteen points less than last month,” Woelfl said.
“The automobile sector is sinking even deeper into the crisis,” said Woelfl.
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