European Market: Accelerating electrification through government measures
Sales plunge in 2020 due to COVID-19 crisis, facing stricter emission regulations and Brexit
2020/07/28
- Summary
- Passenger car sales decline by 42.8% y/y for the period January-May 2020
- Production losses due to COVID-19 crisis amount to 2.4 million vehicles
- National governments to accelerate electrification through demand stimulus measures
- CO2 emissions standard: 95g/km for 2021, 37.5% lower than 2021 target in 2030
- Sales ratio of diesel engine vehicles falling to around 30% in 2019
- Sales ratio of electrified vehicles growing with EVs at 2.3%, PHVs at 1.3%, HVs at 5.9% in 2019
- Brexit: The UK leaves EU at the end of January 2020, negotiating with EU on FTA
- Sales Forecast by LMC Automotive: Western European sales to fall by 25% in 2020, not recover to 16 mn before 2023
Summary
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In 2019, new passenger car sales in 30 European countries increased by 1.2% year-over-year (y/y) to 15.81 million units. Sales remained slow since the start of the year due to the WLTP, a new fuel economy test procedure, introduced in September 2018, but picked up toward the end of the year, surpassing the previous year’s level. However, sales plunged by 42.8% y/y during the period from January to May 2020 as a result of the impact of the COVID-19 pandemic. Production of 2.4 million vehicles was lost by the end of May 2020 in the EU due to shutdowns at vehicle plants across European countries under lockdown. After the plants resumed production, their operating rates have remained below the pre-lockdown levels.
European governments announced their respective economic stimulus packages in May and June 2020. Their schemes for the automotive industry intend to accelerate electrification through demand stimulus measures such as purchase subsidies for EVs and PHVs. In June 2020, the European Automobile Manufacturers’ Association (ACEA) forecasted that new vehicle sales throughout 2020 are expected to fall by 25% y/y.
The CO2 emission standard for new passenger cars sold in the EU will be raised from the current 130g/km to 95g/km in 2021 (to be phased in from 2020). In 2019, the sales ratio of diesel engine vehicles with low CO2 emissions fell to around 30%, while that of electrified vehicles (EV, PHV, HV) remained low at less than 10%. Automakers are expanding their lineups of electrified vehicles including EVs and PHVs to meet the CO2 emissions targets for 2021.
The UK formally left the EU at the end of January 2020. Until the end of December, though, the transition period has been extended and the UK continues to trade with the EU without any custom clearance procedures and tariffs. If the UK and the EU fail to agree on an FTA during the transition period, tariffs will be imposed on UK-EU trade and economic disruptions may occur. Negotiations are currently floundering because the EU is requiring the UK to comply with the EU’s rules for taxation, employment and government subsidies, something which the UK strongly refuses.
Related reports:
European OEM Electrification Strategies, Including EV Product Timelines（Nov. 2019）
German OEM Electrification Strategies, Including EV Product Timelines（Oct. 2019）
Frankfurt Motor Show 2019: European OEMs（Sep. 2019）
European Market: Decreasing diesel vehicle sales, and the shift to EVs（Dec. 2018）
＜LMC Automotive reports＞
Global Top 10 Countries Sales Forecast (Q2 2020) （Jul. 2020）
LMC Automotive European Passenger Car Sales Update (June 2020)（Jul. 2020）
COVID-19 Plant-impact update - Europe（Apr. 2020）
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