The European automotive industry, led by German and French manufacturers, is grappling with significant challenges, including declining demand for electric vehicles (EVs), increasing competition from China, and excess production capacity.
Key players like Volkswagen, Renault, and Stellantis are experiencing falling sales and rising inventories. Stellantis has announced production cuts due to weaker demand, projecting a negative cash flow between five and ten billion euros, while its stock has plummeted nearly 40% this year.
Volkswagen has also downgraded its profit forecast twice in less than three months, facing sales declines in China and the U.S. Similarly, Renault and Aston Martin report demand issues in China, where local brands offer cheaper alternatives.
Chinese manufacturers like Geely, BYD, and Chery plan to establish factories in Europe to circumvent tariffs on EVs, intensifying competition. Despite EU tariffs, these companies rapidly develop lower-cost electric models, putting European firms at a disadvantage.
Experts argue that European automakers have been slow to adapt to market changes driven by pro-EV policies in China and Europe. Policies like the EU Green Deal and the ban on internal combustion engines by 2035 create immense pressure for rapid transformation, risking European competitiveness and economic growth.
Production facilities of major manufacturers like BMW, Mercedes, Renault, and Volkswagen are operating below capacity. Stellantis's Mirafiori plant in Italy has seen production drop over 60% for the Fiat 500e. Audi is considering closing its Belgian plant due to low demand for the Q8 e-tron. Volkswagen is contemplating shutting down its Dresden plant due to poor EV sales.
Despite these challenges, Volkswagen reported a profit of 22.6 billion euros this year, expecting around 20 billion euros next year. However, analysts suggest its crisis management might be a tactic to pressure unions for new state subsidies for EV programs.
Some experts recommend forming a 'climate club' to include major CO2 emitters like China and India, aimed at reducing fossil fuel support and creating fair competition in the global automotive market. While the transition to green mobility is deemed necessary, experts warn that rapid changes could jeopardize Europe's industrial base.
In Croatia, the automotive sector is calling for reforms in national legislation regarding EV incentives, criticizing the current system as ineffective. They propose measures like VAT reductions for EVs and tax incentives for businesses using electric vehicles.