Car production in the EU fell by 11.4% y/y in Q1 – EUROFER

The European Union’s automotive sector is showing signs of a deepening crisis. According to the European Steel Association (EUROFER), car production fell by 11.4% y/y in Q1 2025. This is the fifth consecutive quarter of decline. In Q4 2024, the figure fell by 12.1%. Thus, the recovery that lasted from the second half of 2022 to the end of 2023 has ended, giving way to a protracted decline.

The reasons for the collapse were uncertainty surrounding electric vehicle production standards, lagging development of charging infrastructure, and a decline in consumer purchasing power due to high inflation. Added to this are foreign policy factors: the 15% tariffs announced by the US on European cars are putting pressure on manufacturers, limiting investment and export opportunities.

Market demand also appears weak. In January-July, new car registrations fell by 0.7% year-on-year, although July alone saw a 7.4% year-on-year increase. Sales of electric vehicles continue to grow and have reached a share of 15.6%, but this is below the expected rate for achieving the EU’s goal of completely phasing out gasoline cars by 2035. In contrast, gasoline models fell by 20% y/y, and their share, together with diesel models, decreased to 37.7% from 47.9% a year earlier.

The outlook for 2025 remains negative, with production expected to decline by 4.2% y/y. Only in 2026 is a slight increase of 1.3% y/y possible, but production volumes will remain well below the pre-crisis levels of 2019.

Thus, the EU automotive industry is entering a phase of structural restructuring. Further prospects will directly depend on the restoration of macroeconomic stability, growth in real household incomes, and the removal of barriers to the transition to electric vehicles.

It should be recalled that in the first quarter of 2025, the European Union steel market showed mixed dynamics. Real steel consumption declined for the eleventh consecutive quarter, by 5.5% y/y. At the same time, apparent consumption grew by 2.2% y/y.