Feb 12, 2021
EUROFER: EU auto output to slump 19.5% in 2020, rebound by 15.9% in 2021
2021-02-22
Production activity in the EU automotive industry fell for the eighth consecutive quarter, by 10.7 percent year on year, in the third quarter last year. With weakening demand for new passenger cars in Europe and in key export markets such as the US, China and Turkey, the outbreak of the coronavirus pandemic took an unprecedented toll on production activity in all EU countries, despite the rebound in activity further to the removal of lockdown measures in the third quarter according to the Economic and Steel Market Outlook 2021-2022/Q1 2021 Report from the Economic Committee of the European Steel Association (EUROFER).
According to the EUROFER report, market conditions and car demand in the EU continue to experience unprecedented weakness, despite the strong rebound in production seen from the third quarter of 2020, due to persistently weak demand from consumers amid the economic uncertainty. Passenger car registrations decreased by 23.7 percent in 2020 and 3.3 percent in December, both year on year. Commercial vehicle registrations followed the same pattern, with a drop of 18.9 percent in 2020 and 4.2 percent in December 2020, both year on year.
Demand for new cars from consumers is expected to remain very weak at least until the macroeconomic picture and consumer disposable income improve. In 2021, provided that the industry has been able to restore its production to normal levels, the launch of new models could be a supportive factor, combined with labour market dynamics on the demand side. However, subdued car demand from major markets such as the US, China and Turkey will remain a challenge for EU car exporters.
In addition, potential disputes with the US on tariffs on EU automobiles and automotive parts and components, cannot be completely ruled out, possibly also under the new US Administration, that will still hamper the recovery of the industry. This would continue to impact Germany and the central European industry, which have extensive trade linkages with the US market and are closely integrated into European auto supply chains.
EU automotive production is forecast to be hit the most by trade-related risks, compared to all other steel-using sectors, in the course of 2020, with an annual slump of 19.5 percent predicted, followed by a rebound of 15.9 percent in 2021. In the previous outlook, these figures were 20.6 percent and 18.1 percent, respectively.
Source: Eurometal
