EU Auto industry seen consolidating as falling demand, higher costs bite

Carmakers and suppliers will need to make greater use of lower-cost manufacturing locations and seek broader partnerships to share the costs of the investment.
By : Reuters
| Updated on: 23 Jan 2020, 12:26 PM
FILE PHOTO: Cars drive through the 'Sandkamp Gate' to the Volkswagen factory in Wolfsburg, Germany, September 23, 2015. REUTERS/Axel Schmidt/File Photo
FILE PHOTO: Cars drive through the 'Sandkamp Gate' to the Volkswagen factory in Wolfsburg, Germany, September 23, 2015. REUTERS/Axel Schmidt/File Photo
FILE PHOTO: Cars drive through the 'Sandkamp Gate' to the Volkswagen factory in Wolfsburg, Germany, September 23, 2015. REUTERS/Axel Schmidt/File Photo
FILE PHOTO: Cars drive through the 'Sandkamp Gate' to the Volkswagen factory in Wolfsburg, Germany, September 23, 2015. REUTERS/Axel Schmidt/File Photo

The auto industry faces further consolidation and jobs will migrate to lower-cost countries as companies struggle to develop cleaner vehicles in an economic downturn, European Auto Industry (ACEA) President Mike Manley said on Wednesday.

Tighter emission rules introduced in the wake of Volkswagen's diesel pollution cheating scandal are forcing carmakers to cut average fleet emissions of carbon dioxide to 95 grams per kilometer in 2021, from an average 118.5 grams per kilometer in 2017.

Similar Cars

Find More Cars
Hyundai Kona Electric (HT Auto photo)
Hyundai Kona Electric
cc | Electric | Automatic
₹23.79 - 23.98 Lakhs**Ex-showroom price
Volkswagen Polo (HT Auto photo)
Volkswagen Polo
999 cc | Petrol | Manual | 17.74 kmpl
₹5.83 - 10 Lakhs**Ex-showroom price
Volkswagen Vento (HT Auto photo)
Volkswagen Vento
999 cc | Petrol | Manual | 17.69 kmpl
₹10 - 14.1 Lakhs**Ex-showroom price
Volkswagen Taigun (HT Auto photo)
Volkswagen Taigun
999 cc | Petrol | Manual | 18.1 kmpl
₹10.49 - 17.5 Lakhs**Ex-showroom price
Volkswagen Virtus (HT Auto photo)
Volkswagen Virtus
999 cc | Petrol | Manual | 19.4 kmpl
₹11.21 - 17.91 Lakh**Ex-showroom price
Volkswagen T-roc (HT Auto photo)
Volkswagen T-roc
1498 cc | Petrol | Automatic (Dual Clutch) | 17.85 kmpl
₹21.35 Lakhs**Ex-showroom price

The investments in low-emission powertrains are being made at a time when European passenger car sales are set to drop by 2% this year after six consecutive years of growth, so carmakers will have to cut cost to offset the expense, Manley told reporters in Brussels.

FOLLOW US:Stay Updated with latest content - Subscribe us on
FOLLOW US:Stay Updated with latest content - Subscribe us on

"There will be a migration of jobs to lower-cost countries," Manley said, explaining that the cost of low-emission hybrid and electric powertrains are higher than those for combustion engine variants. "This needs to be rebalanced," Manley said.

Carmakers and suppliers will need to make greater use of lower-cost manufacturing locations and seek broader partnerships to share the costs of the investment.

"We want to ensure a thriving industry. This will require some consolidation," Manley said. "People are looking more rationally at regional requirements and regional scale. In terms of number of carmakers that survive, your guess is as good as mine."

The European Union's Green Deal should be used to strengthen the EU's industrial base and the global competitiveness of its automobile industry.

Any efforts to shift towards a carbon-neutral economy need to be carefully thought through and reviewed. "There will be unintended consequences. Employment is an example," he said, explaining that electric cars take less time to assemble than combustion-engined equivalents.

"The transition to carbon neutrality must be well managed, taking into account social and economic dimensions. Mobility must remain affordable for all European citizens, regardless of where they live or their financial means," Manley said.

Manley called for an EU-wide network of charging points and refuelling stations for both passenger and commercial vehicles.

First Published Date: 23 Jan 2020, 12:26 PM IST
Recommended For You
View All
NEXT ARTICLE BEGINS

Please provide your details to get Personalized Offers on

Choose city
+91 | Choose city
Choose city
Choose city
By clicking VIEW OFFERS you Agree to our Terms and Privacy Policy

Dear Name

Please verify your mobile number.

+91 | Choose city