According to the Economic and Steel Market Outlook 2025-2026/Q3 2025 Report from the Economic Committee of the European Steel Association (EUROFER), in the first quarter of 2025 automotive output in the EU dropped sharply by 11.4 percent year on year, compared to the 12.1 percent decrease in the previous quarter.
According to EUROFER, so far in 2025 the downturn has deepened as trade tensions intensified, most notably with the US announcing tariffs on EU car exports. These measures are expected to further discourage investment decisions by European carmakers and reduce production. At the same time, persistent supply chain disruptions, war-related uncertainties, weak consumer confidence, sluggish disposable income growth, and overall economic instability have continued to drag down EU car demand.
A full rebound in global trade and external demand from key partners like the US and China now appears unlikely. The report underscores that escalating trade frictions, including the newly imposed 15 percent US tariffs on EU car exports, will prolong these challenges. Additional pressures stem from rising Chinese electric vehicle export volumes to the EU and the US Inflation Reduction Act (IRA), which is set to boost domestic EV production further, creating additional headwinds for European carmakers in both markets.
The forecast for 2025 has been revised as a 4.2 percent decline, compared to the earlier expectations of a 2.6 percent contraction, as a result of increasing global uncertainty, growing trade tensions and very low confidence.