European Automotive Industry Faces Decline Amid Economic Struggles

European automakers are predicting lower profits, factory closures, and increased job losses amid sluggish vehicle sales and a decline in electric vehicle uptake. Major firms, including Volkswagen, BMW, and Stellantis, have adjusted their outlooks due to economic pressures and competitive challenges, particularly with the rise of Tesla and Chinese manufacturers.

The outlook for the European automotive industry has turned grim, as several manufacturers, including Volkswagen and BMW, have announced lower profit forecasts and potential factory closures. Stellantis has revised its operational margin target down to between 5.5% and 7% for 2024. The sector, which has enjoyed record profits recently, is now facing significant challenges due to low vehicle sales, high dealership prices, and economic downturns. In 2024, the market has recorded around 7.2 million registrations so far, a continuation of the prolonged low sales experienced since the pandemic. Analysts highlight factors contributing to this crisis, including declining sales in 100% electric vehicles and rising competition from brands like Tesla and Chinese manufacturers. The electrification pace is slowing, with EVs making up 12.6% of sales in early 2024 compared to 13.9% the previous year. Furthermore, established automakers are burdened with high investments in electric vehicle technologies, which are not yielding quick returns. Regional giants like Mercedes are affected by the economic downturn in China, while Stellantis struggles with high vehicle prices in North America, leading to increased discounts and squeezed margins. Component suppliers such as Forvia and Autoliv are also cutting their profit expectations as the market faces challenges. The industry is also confronted with job losses, with projections indicating that while 17,000 jobs may emerge in battery manufacturing and recycling by 2026, about 65,000 jobs could be at risk by 2030 due to the shift from diesel to electric vehicles. According to experts, the transition could lead to a substantial loss of jobs in engine manufacturing over the next 10-15 years, particularly impacting regions like Hauts-de-France, Grand Est, and Normandy.

The European automotive sector is experiencing a downturn after a series of flourishing years, fueled by various complications such as economic challenges, shifts in consumer purchasing habits, and increased competition in the electric vehicle market. Classic manufacturers face difficulties adapting to market changes, including the slow uptake of fully electric vehicles amidst tightening regulations. As major companies revise their growth forecasts downward, there are widespread concerns regarding job stability and the future of the industry.

The European automotive industry is grappling with lowering profit expectations, reduced sales projections, and increased competition, leading to potential factory closures and job losses. The slowdown in the electric vehicle market exacerbates these issues, signaling a precarious future for the sector within a dynamic global economy. Immediate attention is needed to navigate these challenges and innovate toward sustainability.

Original Source: www.charentelibre.fr