Introduction to the automotive crisis
The European automotive sector, once a symbol of innovation and prosperity, is now facing an unprecedented crisis. Car manufacturers such as Volkswagen and Stellantis are experiencing a difficult period, with declining profitability and structural challenges that jeopardize their sustainability. The factors that contribute to this situation are multiple and complex, requiring an in-depth analysis to understand the dynamics at
play.
The main causes of the crisis
According to industry experts, there are four key factors that explain the current crisis. First, trade union relations are a significant obstacle. European car manufacturers, strongly unionized, are faced with collective employment contracts that make it difficult to adapt to new market challenges. For example, Volkswagen’s attempts to reduce costs have been hampered by strict employment contracts, making layoffs and plant closures nearly impossible
.
Second, the expansion of battery electric vehicle (BEV) sales has slowed down. Despite efforts to promote the transition to more sustainable vehicles, BEV sales penetration in Europe has stagnated, with a significant turnaround. Without adequate government support in terms of infrastructure and incentives, it is difficult to predict a significant recovery in this segment
.
Regulatory challenges and Chinese competition
Another critical factor is emissions regulations. European car manufacturers may not meet their expected emission reduction targets, resulting in significant fines. The pressure exerted by policymakers and the Association of European Automobile Manufacturers (ACEA) is a sign of the need to review current regulations to ensure the sustainability of
the sector.
Finally, the economic situation in China has a direct impact on the sales of European car manufacturers. With more than 30% of the sales of major European car manufacturers coming from the Chinese market, the decline in demand and growing domestic competition pose a significant threat. European car manufacturers, once dominated by the Chinese market, are now facing increasingly fierce competition, with a constantly diminishing market share
.