{"id":817761,"date":"2025-01-07T03:11:28","date_gmt":"2025-01-07T09:11:28","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2025\/01\/07\/europes-automakers-face-pummeling-in-2025-but-positives-remain\/"},"modified":"2025-01-07T03:11:28","modified_gmt":"2025-01-07T09:11:28","slug":"europes-automakers-face-pummeling-in-2025-but-positives-remain","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2025\/01\/07\/europes-automakers-face-pummeling-in-2025-but-positives-remain\/","title":{"rendered":"Europe’s Automakers Face Pummeling In 2025 But Positives Remain"},"content":{"rendered":"
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<\/p>\n

The EU is under pressure from car makers to weaken its CO2 rules, which outlaw sales of new internal … [+]<\/span> cumbustion engine vehicles by 2035<\/span><\/p>\n

<\/fbs-accordion>getty<\/small><\/figcaption><\/figure>\n

Europe\u2019s automakers face existential threats on many fronts in 2025, but it\u2019s not all bad news and beleaguered investors are offered some hope.<\/p>\n

The headlines are not reassuring and the key crisis words are CO2, China, tariffs, restructuring, and Germany. Despite overwhelming negativity, investment bank Morgan Stanley and investment researcher Evercore ISI find positives for investors.<\/p>\n

The most pressing problem concerns European Union rules on carbon dioxide emissions, with bottom-line-destroying fines for the bigger failures. These CO2 rules, to force reluctant Europeans to buy electric vehicles and gradually ban sales of new internal combustion engine vehicles until all new ones disappear by 2035, will have other perverse effects. Manufacturers and politicians are mounting a dogged campaign to have the rules diluted.<\/p>\n

EU Commission President Ursula von der Leyen\u2019s Strategic Dialogue on the Future of the European Car Industry<\/a> will be launched this month and watering down the CO2 rules will be top of the agenda.<\/p>\n

Manufacturers lagging in the quest to fulfill the EU mandate are being forced to raise the prices of their most profitable ICE machines, not to make more money but to stifle sales and subsidize EVs. That is bad news for profits.<\/p>\n

Luca de Meo, the CEO of Renault and president of the European Automobile Manufacturers Association, says the European auto industry faces fines of up to \u20ac15 billion ($15.5 billion) for failing to meet the EU’s 2025 CO2 emissions targets.<\/p>\n

There\u2019s the threat from China, still potent even after swingeing tariff increases. And speaking of tariffs, President Trump\u2019s incoming administration has spread alarm and despondency with its scattergun references to possible tariff barriers. That\u2019s disturbing in Europe because for years it has enjoyed an unfair advantage as its products carry a 2.5% tariff in the U.S. while it\u2019s 10% going the other way.<\/p>\n

The threat from China, with its 30% efficiency advantage, is forcing so-called legacy manufacturers to think the unthinkable and close excess production. Volkswagen threatened to close 3 factories, although it backed off after talks with unions. Stellantis and its 14 brands is also said to have too many factories and ousted CEO Carlos Tavares\u2019s replacement will have some tough decisions to make.<\/p>\n

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Business men’s command tower crane lifts Chinese containers and EU containers<\/p>\n

<\/fbs-accordion>getty<\/small><\/figcaption><\/figure>\n

According to French automotive consultancy Inovev, average European auto sales of sedans and SUVs has slumped from an average 18 million a year between 2017 and 2019 to between 13 and 15 million between 2020 and 2024.<\/p>\n

\u201cIt is clear that the European automotive industry is increasingly suffering from overcapacity. Even though several major European factories have closed over the last 10 years, production overcapacity remains significant in Europe,\u201d Inovev said in a report.<\/p>\n

And Germany, Europe\u2019s biggest auto market, is in dire straits.<\/p>\n

Professor Ferdinand Dudenhoeffer, director of Germany\u2019s Center for Automotive Research<\/a>, said the German auto industry\u2019s order backlog is at a 10-year low. Sales in 2025 won\u2019t be much higher than 2024\u2018s 2.8 million. This compares with a peak of 3.6 million sedans and SUVs in pre-covid 2019.<\/p>\n

Professor Stefan Bratzel, director of Germany\u2019s Center of Automotive Management<\/a>, said government action is required to restore German industry\u2019s competitiveness. The early general election next month means action will be delayed as the various winners negotiate over the government\u2019s construction.<\/p>\n

\u201cThat (the election) will lose another half a year in bringing structural reform into place in Germany. That means a great burden for the auto industry in Germany,\u201d Bratzel said in an interview.<\/p>\n

GlobalData summed up the conventional wisdom on 2025\u2019s prospects.<\/p>\n

\u201cWe believe that growth should uptick in 2025 with the introduction of new models and more monetary easing. Despite this, ongoing geopolitical tensions, as well as the collapse of the German and French governments, bring great uncertainty that is expected to drag on sales,\u201d GlobalData said in a report.<\/p>\n

GlobaData forecast Western European sales will rise 2.3% to 11.71 million compared with last year\u2019s 0.9% fall.<\/p>\n

Investment bank UBS reiterated its long-held view that 2025 will represent a perfect storm for automakers, with prices under pressure, and tighter CO2 rules (despite the possibility of some long-term mitigation). There are the tariff risks and weak demand, which will drive down profits in the midst of factory closures.<\/p>\n

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Fuel gauge pointing at empty reading. I<\/p>\n

<\/fbs-accordion>getty<\/small><\/figcaption><\/figure>\n

Investment researcher Evercore ISI said the negative themes which started in 2024 will persist in 2025, but there are some positives on the horizon.<\/p>\n

\u201cDo we think this malaise will last the whole year? That\u2019s the bright spot in our 2025 outlook, we don\u2019t necessarily think so,\u201d Evercore ISI said in a research note. It reckoned by mid-year sales might start to rise and 2026 production schedules might look promising.<\/p>\n

\u201cHas any of the secular headwinds gone away? Mix, EV, Lacklustre legacy tech. No. But rising volumes are always the cue for any Auto ailment,\u201d it said.<\/p>\n

Morgan Stanley changed its outlook for Europe\u2019s auto manufacturers in 2025 from \u201cCautious\u201d to \u201cIn-Line.<\/p>\n

\u201cWe see a more balanced risk\/reward with still some margin downside but also opportunities that the market may be missing,\u201d Morgan Stanley said in a report.<\/p>\n

Morgan Stanley said plus points include recovering affordability of SUVs and sedans, with perhaps some easing of EU regulations.<\/p>\n

\u201c\u2026\u2026\u2026pent-up demand is building and affordability keeps improving from historical lows, reaching healthy levels by mid-2025, driven by falling prices, lower interest rates, subsidized funding, improving disposable income and potentially subsidies,\u201d the report said.<\/p>\n

News about possible tariffs should give the issue more visibility. Chinese automakers might set up alliances with Europeans to speed up penetration of EVs, but also allow Europeans to benefit from their technology lead, according to Morgan Stanley.<\/p>\n<\/div>\n

Read More<\/a>
\n Neil Winton<\/p>\n","protected":false},"excerpt":{"rendered":"

The EU is under pressure from car makers to weaken its CO2 rules, which outlaw sales of new internal … [+] cumbustion engine vehicles by 2035 getty Europe\u2019s automakers face existential threats on many fronts in 2025, but it\u2019s not all bad news and beleaguered investors are offered some hope. The headlines are not reassuring<\/p>\n","protected":false},"author":1,"featured_media":817762,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[33895,27241],"tags":[],"class_list":{"0":"post-817761","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-automakers","8":"category-europes"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/817761","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=817761"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/817761\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/817762"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=817761"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=817761"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=817761"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}