Production activity in the EU automotive industry fell, unexpectedly, by 1.3 percent year on year in the third quarter of 2018. In contrast, average quarterly growth over the first half of 2018 had been slightly more than five percent year on year, according to the Economic and Steel Market Outlook 2019-2020/Q1 2019 Report from the Economic Committee of the European Steel Association (EUROFER).
The impact of the transition to new emission testing procedures on production through stock clearances was particularly felt in Germany, the UK and Italy, whereas France still registered growth in activity. Production activity in the fourth quarter of 2018 is estimated to have fallen by 2.3 percent year on year, while EU automotive production is forecast to rise by one percent in 2019 and by 2.4 percent in 2020.
EUROFER said that the outlook for 2019 and 2020 is obscured by several factors. EU passenger car demand is expected to continue to moderate after several years of strong demand growth. The western European market is particularly close to saturation in terms of vehicle density, albeit with regional divergences. Should the Trump administration’s protectionist stance result in higher automotive import tariffs, Germany, Italy and the UK would be hardest hit. For UK manufacturers, the prospect of the country leaving the EU under a ‘no-deal’ scenario would have disastrous consequences for UK production sites.