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 is not enough to worry leaders when they return from their vacation, the prospects for 2025 look worse, as European Union regulations on carbon dioxide emissions require a new point of tightening. More mildly successful electric cars will have to be sold. of what the public needs to buy, which will lead to a decline in sales of blockbuster 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 indicates that there will be virtually no increase (a slightly measurable 0. 2 per cent), 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 remain high – even though the root constraints that caused the sharp rise in vehicle costs in recent years have faded – and show no symptoms of a primary downward revision in the short term. Meanwhile, the electric vehicle market is also losing momentum. We now expect the annual result to eclipse that of 2023,” he said.
BMI, a Fitch Solutions company, expects its sales in the European market to slow to a 4. 6% expansion in 2024, to 19. 3 million. In 2023, sales rose as much as 19. 2% as chain disruptions normalized, allowing automakers to catch up.
Investment bank UBS said that deterioration would hit 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. [+] stylish electric car (Photo via FABRICE COFFRINI/AFP Getty Pictures)
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 said the consequences could simply be doubled.
“Volvo and BMW are better positioned, while Volkswagen and Renault have a major hole to close,” the report says.
Laggards hope that new solutions can close the gap.
“VW and Renault will see a flood of launch activities for new electric vehicles from 2024, which deserve to help, but deviation from targets will bring greater attention and importance to the good fortune of those models. Mercedes and Stellantis are older are still not out of the woods, especially if demand for electric cars continues to disappoint,” according to the report.
As part of its long-term cost-cutting plan, VW has cut back and closed factories.
The German institute IFO believes that its car is sinking into darker territory.
“We should not expect a significant improvement 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 report a lack of orders, compared to 29. 2% in April. Nor is a positive momentum expected. Export expectations fell to -16. 8 Compared to last month, more than thirteen emissions were reduced,” Woelfl said.
“The automobile sector is sinking even deeper into the crisis,” said Woelfl.
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