Europe’s auto industry will look for support as it eyes recovery later in the year

Following the news that European vehicle-maker trade association, ACEA, has warned that Europe’s auto industry faces its ‘worst crisis ever’;

David Leggett, Automotive Editor at GlobalData, a leading data and analytics company, offers his view:

“The European automakers’ trade body ACEA noted that the effect of the coronavirus (COVID-19) on society and the global economy is unprecedented, with grave consequences for the automobile industry.

“I certainly agree that the crisis is worsening with many vehicle makers announcing temporary closures of plants – of uncertain duration – due to collapsing demand, supply shortages, and government measures – as well as facing cases of COVID-19 infections and quarantines among their employees.

“With automotive manufacturing coming to a standstill and the retail network effectively closed, the short-term outlook is bleak, governed by the path of the public health crisis.

“When the worst of the immediate crisis has passed, attention will turn to support measures aimed at reinforcing economic recovery. The auto industry will be central to that aim.

“Past experience shows that scrappage policies can help to stimulate new car purchases and kick-start demand to boost orders and get factories working again.  They could well be on the policymakers’ agendas later in the year. Also, I would imagine that tough new regulations for average CO2 targets in Europe could be looked at again in these extraordinary circumstances. Apart from anything else, automakers can argue that shuttered plants and a much lower level of new vehicle sales and subsequent usage will have helped to reduce their net CO2 impacts this year.

“Policymakers will be very wary of anything that drags further on companies’ bottom lines or risks reducing activity and employment levels further.”

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