European auto industry recovers better than expected (International Perspective)

Thanks to the industry support policies issued by European governments, the recovery process of European automobile industry is better than expected. In order to effectively enhance their market competitiveness, European auto companies are accelerating the pace of restructuring and integration. Several institutions said that if the epidemic can be effectively controlled, the European auto market will continue to improve this year.

  

According to the latest data released by the European Association of automobile manufacturers, car sales in Europe have recovered to 75% of the pre epidemic level. A report by Fitch, a consulting firm, pointed out that with the policy support of the European Union and its member governments, the European automobile industry chain is accelerating its recovery, and the automobile sales in 2021 are expected to increase by 10.8% compared with last year.

New energy vehicles become the biggest bright spot in the market

Under the influence of increasingly stringent emission standards and expanding incentive policies of the EU, the sales of new energy vehicles in the EU will rise against the trend in 2020, becoming the biggest highlight of the European automobile market.

According to statistics, in 2020, the sales volume of new electric vehicles and plug-in hybrid vehicles in Europe will increase by 45%, reaching 1.25 million, with a market share of nearly 10%. Among them, the sales volume of electric vehicles in Germany increased nearly three times to 194000. The market share of pure electric vehicles in France will increase from 1.9% in 2019 to 6.7% in 2020, while that of plug-in hybrid vehicles will increase from 5.7% to 15%. In 2020, the sales volume of electric vehicles in Norway will account for 54% of the total sales volume of new vehicles, becoming the first country in the world where the sales volume of electric vehicles will account for more than 50%.

Recently, the European Commission launched a new proposal on intelligent transportation, which aims to accelerate the EU’s green and digital transformation in the field of transportation. According to the proposal, the EU plans to achieve zero emission vehicle ownership of at least 30 million vehicles by 2030, establish 3 million public charging piles, and introduce carbon trading mechanism in the field of transportation. The EU also plans to introduce a new carbon dioxide emission standard for motor vehicles in June this year.

Countries in the region have also increased policy support for the development of new energy vehicles by imposing carbon emission taxes and providing car purchase subsidies. The French government has previously announced an 8 billion euro plan for the revitalization of the automobile industry, giving consumers of electric vehicles financial subsidies of up to 12000 euros, and promised to completely stop the sales of traditional energy vehicles before 2040; Germany will extend the subsidy for the purchase of electric vehicles to 2025, and set up a special fund to encourage the green transformation of the automobile industry; the Italian government recently announced that It will provide a special subsidy fund for new energy vehicles with a total amount of 120 million euros, and provide a maximum reward of 8000 euros to users who purchase new energy vehicles.

Major European automobile manufacturers plan to set up super battery factories in Germany, France, Poland, Hungary and other places in 2021. According to the prediction of LMC auto, about 25 battery factories will be built in Europe by 2032, with an average annual capacity of 24 GWH. The analysis points out that in the future, by further realizing the vertical integration of the whole supply chain of electric vehicles, the average cost of electric vehicles in the EU can be reduced by more than 10%, effectively improving its market competitiveness.

Government support and industry self rescue

During the period of epidemic prevention and control, in order to alleviate the general difficulties faced by automobile enterprises, the governments of EU member states have taken positive measures to provide support through loan guarantee, preferential interest rate and tax relief, and achieved remarkable results.

Recently, the governments of various countries have further increased their support for domestic automobile enterprises. The French government has decided to further extend the deadline of consumer subsidy policy from December 2020 to July 2021. The German government recently decided to add another 3 billion euro subsidy to the automobile industry for activities including helping enterprises adjust production lines, so that the total financial support will reach 5 billion euro.

European car companies are also trying to help themselves in various ways. Market analysis shows that European car manufacturers will pay more attention to brand value maintenance and cost control. More and more new business models emerge as the times require. For example, in the field of automobile sales, online sales and contactless delivery have become the main marketing methods of major brand dealers. Andres chisner, head of McKinsey’s European automotive market consulting business, said the new business model is of great significance to make up for the losses of the epidemic to the industry.

At the same time, European auto companies accelerated the pace of restructuring and integration. A few days ago, the merger plan between Citroen Group and Fiat Chrysler, an Italian American manufacturer, was finally approved. After the merger, the enterprise will become the fourth largest automobile manufacturer in the world, creating new opportunities for European automobile enterprises to further expand their overseas markets. European media believe that the merger of Peugeot Citroen Group and Fiat Chrysler will enable the two sides to form effective complementary advantages in electric vehicle R & D and market development. Recently, Volkswagen and Ford have reached cooperation intention on jointly developing electric vehicle and automatic driving technology, and the cooperation between Daimler and Tesla, Volvo and Peugeot Citroen is also actively promoting. In addition, Mercedes and NVIDIA, a well-known software development company, recently started to jointly develop the next generation of automotive computer platform system.

The industry faces the challenge of structural transformation

Many institutions believe that the European auto market is expected to continue to improve this year. IHS Markit, a financial data services company, predicts that the overall sales volume of the European auto market will increase by 11% year on year in 2021.

Michael Dean, an expert in market information analysis at Pember, said that the overall European auto industry is expected to show a rapid recovery trend in the second quarter of this year, but the prerequisite is that the epidemic situation is effectively controlled and countries implement the lifting measures in time.

Some analysts also pointed out that the European auto market had been slowing down long before the epidemic. In the medium and long term, to revitalize the auto market, we need to effectively deal with the deep challenges brought about by the future structural transformation of the industry. McKinsey’s European automotive industry vision report shows that the European traditional automotive industry is facing challenges such as the transformation of business model, the development of innovative technology, the reorganization of value chain and competition from outside the traditional fields.

Michael Manley, President of the European Association of automobile manufacturers, said the epidemic and the resulting economic recession will bring pressure on the transformation of the European automobile industry. Relevant policy makers need to grasp the opportunity to help the industry achieve faster transformation. “The logic of the recovery of the European auto industry is not to restore the old model, but to establish a better new model.”

Technology is reshaping the entire auto industry, according to the PWC report. Automatic driving, Internet of vehicles, electrification and sharing are the main trends of the future automotive industry. In this regard, European traditional automobile manufacturers cope with the pressure of transformation through mutual restructuring and strong alliance, and cooperation with technology giants.

Professor Peter wells, director of the automotive industry research center of Cardiff Business School in the UK, said that due to the uncertainty of the future development prospects of the industry and the huge investment in each new technology, the European automotive industry is more inclined to share costs and reduce risks through integration and cooperation. At the same time, this model also enables traditional European car companies to maintain their advantages in the face of challenges from emerging technology giants such as Uber and Google.

(Brussels, January 14)

People’s daily (January 15, 2021, 16th Edition)

(editor in chief: e Zhichao, Lian pinjie)