Stable EU auto market in view for 2019, with CO2 and trade challenges ahead

Although 2018 was the fifth consecutive year of growth, the pace of growth has slowed down significantly over the last few years, amounting to a slight increase of just 0.1% in 2018 (compared to +9.3% in 2015). For 2019, ACEA expects at best a stable EU car market, with a growth rate of under 1%.

“Given this rather shaky growth forecast, we will need to take every effort to safeguard our industry’s competitiveness, bearing in mind some of the major challenges ahead,” stated ACEA President Carlos Tavares during a press conference in Paris this afternoon. “These include meeting stringent car and van CO2 targets – both for 2020 and the recently-agreed post-2020 targets – the looming prospect of a no-deal Brexit, and the ever-present threat of tariffs on US car imports.”

Largely due to the continuing decline in diesel sales – which are being offset primarily by an increase in sales of petrol cars (up by almost six and a half percentage points last year) – first indications suggest that 2018 was the second year in a row where CO2 emissions from new cars increased. In this context, meeting future CO2 targets will require a significantly stronger market uptake of electric cars and other alternatively-powered vehicles than is currently proving possible. Consumers however remain sceptical.

Indeed, the latest full-year figures show that just 2% of all new cars sold in 2018 were electrically-chargeable. This is largely due to the limited affordability of these cars, as well as the lack of charging and refuelling infrastructure. “In an effort to make these extremely ambitious CO2 reductions achievable in practice, we are urging policy makers to ensure that all the right enabling conditions are in place, particularly by making the much-needed investments in infrastructure,” urged Mr Tavares.

“The prospect of a no-deal Brexit still has not been ruled out. On the contrary, this scenario looks more likely than ever before,” Tavares warned. Hence, auto manufacturers are being forced to take drastic contingency measures – with some seeking warehouse space to stockpile parts, others planning a temporary post-Brexit production shutdown, and several companies even cutting back their investments in the UK.

Tavares: “The harsh fact, however, remains that none of this can realistically cover all the gaps left by the UK’s withdrawal from the EU on WTO terms. That is why we are urging both sides to redouble their efforts to successfully conclude a withdrawal deal in these crucial final weeks.”