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Headwinds Facing the European Automotive Industry

Oct 3, 2019

European Automotive Industry Outlook 

The European automotive industry has achieved record sales and reached to the top of the global industry. Technological advancements and fundamental changes in the industry, however, are threatening Europe’s lead position. The industry is currently facing strong headwinds due to the introduction of new emissions standards, autonomous driving, sharing, and connected cars. Buyers are being forced out of their fuel frugal diesel city cars into gasoline-powered vehicles. This is creating problems for the manufacturers and increasing the average fleet fuel consumption. For better understanding, we have highlighted European automotive industry challenges in 2019 and beyond.

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European Automotive Industry Challenges

European automotive industry challenges #1: Business models offering car ownership 

Despite traditional buying and leasing models available, consumers are more inclined to business models offering monthly subscriptions. They sign up for the service they want and then cancel when they are done. Such service providers give consumers access to vehicles, insurance, and maintenance. Apart from this, many service providers provide access to a marketplace of pre-owned vehicles. This reduces the possibility for consumers to invest in the concept of owning a vehicle. Moreover, parking costs and maintenance costs are shifting expectations of consumers. It then becomes a challenge for companies to shift from traditional B2C channel to B2B channel.

European automotive industry challenges #2: Demand for environmentally sound vehicles

The growing positive perception of non-combustion engines amongst consumers is compelling automakers to develop hybrid and electric vehicles. The decreasing market share of diesel cars and increasing demand for environmentally sound vehicles is adding to the woes of the client. With the increasing awareness of the wider environmental implications of driving and stringent regulations, reassuring consumers of the environmental credentials and considerations of business will be a major challenge for companies.

Inability to keep pace with the latest consumer demand can make it difficult for companies to survive in the long run. Give SpendEdge a try by requesting a free demo of our procurement platform and gain exclusive insights regarding the most pressing European automotive industry challenges. 

European automotive industry challenges #3: Smart vehicle technology 

The introduction of smart vehicle technology will change the way cars interact with each other and with the roads. It is being rolled out slowly in a few countries to improve the road network. If it reduces road accidents considerably, it can change the way vehicle insurance works. Moreover, technologies such as artificial intelligence along with smart assistants like Alexa and Cortana into vehicles will provide the opportunity for drivers to integrate their time spent on driving with other parts of their lives and daily routines. Adopting these technological developments and being agile in responding to resulting changes in consumers demand will be a major challenge for companies in the European automotive industry.

European automotive industry challenges #4: BREXIT

Most manufacturers consider that a no-deal Brexit will impact their prospects negatively.  Border delays and changing tariffs will have a major impact on the European automotive industry supply chain and cause disruption. This can take a lot of time for companies to reinstate the respective supply chains back to their current cost-effective standards. Also, it can cost vehicle manufacturers millions of sales in the coming years.

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