Europe Auto Industry Faces Perfect Storm, Lobby Group Says

(Bloomberg) -- Europe’s automakers are facing deepening challenges as demand for EVs disappoints and costs rise, ahead of tougher new European Union regulation to reduce carbon emissions, according to the head of the region’s car lobby group.

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The EU car industry is still “missing more than 2 million vehicles in the market and in factories” compared to pre-pandemic levels, Sigrid de Vries, director general of the lobby group, said Wednesday in an interview with Bloomberg Television. “That creates a lot of tension — we sometimes call it the almost perfect storm.”

The Brussels-based European Automobile Manufacturers’ Association, or ACEA, last week called for “urgent action” ahead of stricter EU emissions targets due to take effect in 2025, which could potentially cost billions of euros in fines for some of them just as Chinese EV makers boost sales in the region.

While EU carmakers remain committed to the green transition, regulators need to be more “flexible” and find ways to better support the industry, de Vries said.

“At the moment we’re having lots of talks,” de Vries said. “We’re informing policymakers about what the issue is, what the concerns are, what the background to these concerns is.”

EV sales in Europe have fallen short of expectations after countries including Germany reduced incentives. A slump in car output in Italy also has come under scrutiny, prompting Giorgia Meloni’s government to seek a rethink of EU rules.

Volkswagen AG this month outlined plans to shut sites in Germany for the first time to save costs. The maker of the Golf is estimated to face the steepest fines as part of the EU’s reduced CO2 fleet emission targets as of next year. Others such as Stellantis NV and BMW AG are expected to meet incoming emissions rules.

--With assistance from Oliver Crook.

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