Car production in the EU will decrease by 6.5% y/y in 2024 – EUROFER

Production in the EU automotive industry will decline by 6.5% in 2024 compared to 2023. This forecast was published by the steel producers’ association EUROFER in its Economic and steel market outlook 2024-2025, Q4.

In 2025, the sector is expected to recover moderately by 1.9% y/y. At the same time, the previous forecast for 2024 was -3% y/y, and for 2025 – +2.3% y/y.

The decline in activity in the EU automotive sector has become more noticeable since the beginning of 2024. In the second quarter, production in the industry decreased by 7% after -2.4% in the first quarter.

The reversal of the positive trend, which lasted from mid-2022 to the end of 2023, was largely driven by deteriorating market conditions, where the situation for car manufacturers was complicated by uncertainty over electric vehicle production standards and a lack of charging infrastructure. Demand was also affected by low real household incomes and high inflation, which restrained consumer spending. As a result, production volumes in the industry remain below pre-COVID-19 levels and even below those of 2019, when the industry was already experiencing a slowdown.

Despite positive signals in 2023, when demand for passenger cars in the EU was gradually recovering, by mid-2024, signs of weakening began to emerge. In August, new car registrations in the EU fell by 18.3% y/y. Particularly significant losses were observed in the main EU markets: in Germany – by 27.8% y/y, in France – by 24.3%, in Italy – by 13.4%. Only the Spanish market experienced a smaller decline, down 6.5% y/y. At the same time, in the first eight months of 2024, new car registrations increased by 1.4% y/y, approaching 7.2 million units.

Demand prospects continue to be affected by uncertainty over the introduction of electric vehicles, high production costs, lack of infrastructure for electric vehicles, and gradual preparations for the ban on gasoline cars in the EU by 2035. As a result, automakers’ decisions to invest in new projects are being delayed, and the sector remains dependent on a gradual improvement in the economic environment and a recovery in consumer income.

For a full recovery, the sector needs stable global economic growth, improved demand in foreign markets, and confidence in the future of the EU electric vehicle market, EUROFER summarizes.

As GMK Center reported earlier, EUROFER downgraded its expectations for apparent steel consumption in the EU in 2024 to -1.8% y/y. The previous forecast assumed a 1.4% yoy increase. Expectations for growth in apparent steel consumption in the EU in 2025 have also been downgraded from +4.1% to +3.8%.