Europe, including the European Union, the United Kingdom, and the member countries of the European Free Trade Association, accounts for around one in four of all new passenger car registrations. The continent is home to some of the world’s largest automotive manufacturers such as PSA Group and Volkswagen AG. Domestically produced vehicles account for the majority of new car registrations and yet, car imports into the European Union are worth 50 billion euros annually. EU imports of vehicles from Japan and South Korea have managed to grow healthily amidst a cooling market activity. Germany is Europe’s long-standing largest market for new passenger cars, as well as its largest producer—the country employs over 800,000 workers in the automobile and component manufacturing sector.
Slow economy causes drop in demand
In 2020, the passenger car market followed the global trend of economic stagnation. The coronavirus outbreak led to a dramatic decline in new vehicle sales across the continent. Decreasing affordability and an economic downturn have added to the lack of demand in European markets. The most noticeable drop in demand occurred in the United Kingdom, where passenger car sales peaked in 2016 and have fallen consistently since. A weakening currency in the wake of the 2016 Brexit referendum makes new vehicles more difficult. Gasoline remains the leading fuel type for cars in the UK, while demand for electric vehicles (EV) is slower than in some other markets. The electro-mobility movement has been slow to hit Europe compared to leaders in electric adoption, particularly China. European automakers were reluctant to move away from much-beloved combustion engines until there was a need to. As demand for petrol and diesel vehicles began to slow, and new EU regulations came into effect, European manufacturers accelerated mass-market battery models in 2019 and 2020. Some countries in Europe have stood out for their drive towards battery electric power, namely Norway, following decisive policy making from the government. Battery electric vehicles have a larger market share in Norway than anywhere else in the world. The Netherlands is the second in the world for battery electric market infiltration.
Sector faces challenges from multiple directions
Many production facilities were forced to reduce output for an extended period of time meaning far fewer cars will be produced in 2020 compared to previous years. For countries in which the car manufacturing sector was already struggling prior to the pandemic, the drop in demand will be particularly affecting. UK production levels are on the decline and, yet again, Brexit has been cited by a number of automotive manufacturers as a reason for cutting production in the UK and in some cases closing manufacturing facilities entirely.
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Post time: Mar-01-2022