Europe’s Car Market Faces a Price Crunch
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Table of Contents
A new report warns that rising car prices are putting a strain on Europe’s auto industry, making it increasingly difficult for manufacturers to keep sales afloat. This trend, analyzed in Jato Dynamics’ latest white paper, “Rising Car Prices and Their Impact on Europe’s automotive Industry,” highlights a worrying decline in new car registrations and points towards potential long-term challenges for the sector.
According to the study, new car registrations across 28 european countries totaled just 9.74 million units during the first three quarters of 2024, a meaningful drop from the 12.11 million units registered in the same period of 2019. this gap widens further when compared to 2018, indicating a trend of decreasing sales that shows no signs of abating.
The looming 2035 European Union mandate, which requires all new cars to have zero tailpipe emissions, is believed to be contributing to this price surge. While the shift towards battery-electric vehicles (BEVs) is encouraged,the rising cost of these vehicles poses a challenge for consumers and automakers alike.
China has emerged as a key player in this evolving landscape, leveraging its secured battery supply chain to produce affordable electric alternatives. data from JATO dynamics reveals that out of the 7.2 million BEVs sold globally between January and September 2024, 4.1 million were sold within China, and 3.7 million were sold by Chinese manufacturers.
A stark picture emerges when examining average retail prices for new cars across Europe.In Germany, the average price stands at €56,735 ($59,395), surpassing the average German employee’s pre-tax annual income of €51,900 ($54,334) according to the Federal Statistical Office. Similar trends are observed in other major European markets like France (€49,000 or $51,298), Spain (€54,000 or $56,532), Italy (€56,000 or $58,626), and the UK (€59,360 or $62,143).
Interestingly, the price surge isn’t limited to electric vehicles.In Germany, while BEV prices increased by 5.2% between 2019 and 2024, prices of internal combustion engine (ICE) vehicles soared by 26.1%. Similar disparities are seen in Spain, where BEV prices rose by 1.9%, while ICE vehicle prices climbed by 17.7%. In the UK, BEV prices increased by 16.5%, and ICE vehicles by 29%.
European Car Prices Soar Despite Electric Vehicle Growth
European car prices continue their upward climb, defying expectations and raising concerns about affordability and the pace of electric vehicle adoption. A recent analysis by automotive research firm Jato Dynamics revealed a stark reality: prices for internal combustion engine (ICE) vehicles surged by an average of 4% across major European markets during the first half of 2023.
Interestingly, the trend varied across the continent. in France, electric car prices dipped by 6.4%, while ICE vehicle prices jumped 10.4%. Italy, though, bucked the trend, with electric car prices climbing by a significant 31.5%, outpacing the 18.4% increase seen in ICE vehicles.
Felipe Munoz, a Global Analyst at Jato dynamics, sheds light on the situation, stating, “Europe is a mature automotive market and therefore years of extreme growth are an event of the past.”
Munoz argues that the current situation is not a typical market fluctuation, but a sign of a deeper-rooted problem. “The rising prices of ICE vehicles come in contrast to what many believe: that the arrival of more electric cars is the driving force behind Europe’s pricing problem. however, with just 10 years untill the EU’s 2035 deadline, it is alarming that BEVs still account for only 15% of total passenger car registrations in Europe. This presents a different problem entirely, reflecting a potential disconnect between those setting the policies and those working across the automotive industry,” he adds.
Munoz concludes with a stark warning: “Until now, European OEMs may have been able to remain profitable despite higher prices. However, the emergence of China as an automotive superpower has changed the game and they must now look for new ways to reduce their prices in an increasingly competitive market, or risk extinction.”
## Europe’s Car Market: Caught in a Price Crunch
**Host:** Welcome back to Archyde. Today, we’re diving deep into the turbulent waters of Europe’s car market. A new report by Jato Dynamics paints a concerning picture, highlighting a worrying trend of rising car prices and plunging sales. To shed light on this complex issue, we’re joined by [Alex Reed Name], a leading industry expert and analyst. Welcome to the show.
**Alex Reed:** Thank you for having me.
**Host:** Let’s start with the basics. The Jato Dynamics report indicates a significant drop in new car registrations across Europe. Can you elaborate on the extent of this decline?
**Alex Reed:** Absolutely. The figures are stark. Across 28 European countries, new car registrations for the first three quarters of 2024 totaled only 9.74 million units. This is a considerable drop from the 12.11 million units registered in the same period of 2019, and the trend only seems to be worsening when compared to previous years.
**Host:** What factors are driving this alarming trend?
**Alex Reed:** several factors are at play. The looming 2035 EU mandate requiring zero tailpipe emissions in new cars is a major contributor.While the shift towards Battery Electric Vehicles (BEVs) is crucial for environmental sustainability, it comes with a hefty price tag. The rising cost of BEVs is pricing out a large segment of consumers.
**Host:** We understand China is emerging as a key player in this evolving landscape. Could you explain their role?
**Alex Reed:** China has leveraged its secure battery supply chain to produce more affordable electric vehicles. The data is clear: out of the 7.2 million BEVs sold globally between January and September 2024,a significant 4.1 million were sold within China, largely by Chinese manufacturers. Thay present a strong competitive challenge to European automakers.[1]
**Host:** This raises concerns about Europe’s ability to compete in this new electric car market.What needs to happen to ensure European automakers don’t get left behind?
**Alex Reed:** European automakers need to address the price disparity. This involves finding innovative ways to bring down production costs and explore choice battery technologies.
Additionally, governments need to provide more robust incentives for consumers to switch to electric vehicles.
**Host:** A fascinating conversation, [Alex Reed Name], thank you so much for sharing your insights with us.
**[Alex Reed Name]:** my pleasure. It’s crucial to have these discussions as we navigate this crucial transition in the automotive industry.
Berkaitan dengan CNBC
## CNBC Interview: europe’s Car Market at a Crossroads
**Host:** Welcome back to CNBC’s Squawk Box. Today we’re diving into the tumultuous European car market, where prices are soaring adn a new era of electric vehicles is on the horizon. Joining us is Felipe Munoz, Global Analyst at Jato Dynamics, a leading automotive research firm. Felipe, thank you for being here.
**Felipe:** Thanks for having me.
**Host:** Felipe, your latest research paints a concerning picture for Europe’s car industry. Some European countries are even seeing average car prices surpass the average income of residents. What’s driving this dramatic price increase?
**Felipe:** There are several factors at play. First, we have the global semiconductor shortage which has severely impacted production and increased costs. Second, the transition to electric vehicles, while necessary, is a very expensive endeavor. Battery technology remains costly, and the infrastructure needed to support widespread EV adoption isn’t fully developed yet.
**Host:** In your analysis, you also identified a surprising trend – while electric vehicle prices have seen some dips, prices of traditional internal combustion engine vehicles have skyrocketed.
**Felipe:** Exactly. This challenges the conventional wisdom that evs are solely responsible for the price hike. Our data shows that ICE vehicle prices are actually increasing at a faster rate in many european markets.
**Host:** So what does this mean for the average European consumer? Will they be priced out of the car market entirely?
**Felipe:** It’s a real possibility. Affordability is a meaningful concern. We’re seeing a growing trend of consumers opting for used cars or delaying car purchases altogether. This could have serious implications for the industry, as declining sales could lead to factory closures and job losses.
**Host:** Looking ahead, what does the future hold for Europe’s car market? Will Chinese automakers entering the European market, known for their more affordable EVs, further disrupt the industry?
**Felipe:** Absolutely. You have manufacturers like BYD and MG making serious inroads,offering competitive EVs at attractive prices. This will force established European automakers to adapt quickly, either by lowering their prices or by finding innovative ways to differentiate themselves.
**Host:** So, this presents both a challenge and an opportunity for European automakers?
**Felipe:** Precisely. They need to embrace innovation, streamline their production processes, and focus on delivering value to consumers. Those who adapt and evolve will survive. Those who don’t, risk being left behind in this rapidly changing market.
**Host:**
Felipe Munoz, Global Analyst at Jato Dynamics, thank you for sharing your valuable insights today.
** Felipe:** My pleasure.
