The Association of European Automobile Manufacturers (Acea) represents the 16 largest vehicle manufacturers in Europe and in Five days We have spoken with its CEO, Eric-Mark Huitema, in order to address the consequences of the crisis generated by Covid-19 for the sector and what is the horizon that awaits him in the short-medium term.
Huitema joined the employer in September last year from IBM, where he was responsible for Global Intelligent Transportation. He has also worked in the Information Technology sector, in companies such as the startup Chello Benelux, of which he was co-founder, EDS International and at Philips Electronics.
The Dutch manager considers that the effect that the coronavirus pandemic has had on society and the world economy “is unprecedented.” “It is likely to last longer than the financial crisis of 2008-2009. In fact, all the markets of the European Union (EU) are in recession this year and GDP will contract by 8.1% this year. Unemployment in the EU is expected to rise to 9% this year. This has serious consequences for the automotive industry ”, he asserts.
Most manufacturers, as well as suppliers, dealers and repair shops, had to close 30 days on average in Europe due to the coronavirus. According to Acea, this caused a production loss of 3.6 million vehicles in the first half of the year, or around 20% of the total manufacturing of 2019.
25% drop in sales
For their part, car sales in the EU have plummeted 28.8% between January and September compared to the same period last year, to seven million units. In this context, the employer’s association has “radically” revised its enrollment forecast for 2020. It expects a 25% drop compared to 2019, which will mean the “steepest drop ever experienced by the sector,” says Huitema. “The outlook is similar on a global scale, and demand is expected to drop by 21%,” he says. In addition, he warns that “there is a risk of a second devastating economic blow just around the corner in the form of no-deal Brexit.”
In his opinion, this scenario would lead to trade losses between the EU and the United Kingdom amounting to 110,000 million euros until 2025, in addition to another 100,000 million in value of lower production due to the health crisis. The European automotive sector will lose around 100,000 jobs in 2021 due to the coronavirus, according to the forecasts of the European Association of Automobile Suppliers (Clepa).
7% of the continent’s GDP
The automobile sector generates a business volume that accounts for 7% of the continent’s GDP and employs almost 14 million people directly and indirectly, which represents 6.1% of total employment. Only 2.6 million people work in the production chain.
In addition, around 19 million passenger cars, commercial vehicles and trucks leave the assembly plants of the ‘Old Continent’ each year, 20% of world manufacturing, according to data from Acea and the International Organization of Motor Vehicle Manufacturers ( OICA).
Global vehicle demand is expected to decline 21% this year compared to 2019
Another threat to the engine is the “ambitious” climate targets of the European Commission (EC): reduction of carbon dioxide (CO2) levels by 55% by 2030 compared to 1990.
“The automotive industry fully supports the EU’s long-term goal of climate neutrality by 2050 and wants to play its role in making Europe the first climate-neutral continent. However, the ambitious objectives set out in the EC proposal will require massive additional investments from the sector, at the same time that it has been shaken by the coronavirus crisis, ”Huitema warns.
The manager summarizes that Covid-19 has added “enormous additional pressures” on the car when it goes through “fundamental technological changes, as well as geopolitical challenges.” The automotive industry is undergoing a major transformation that is encompassed under the acronym CASE (Connectivity, Autonomous, Mobility Services and Electrification).
The ACEA secretary general believes that there should be a “strong focus” on increasing the adoption of the latest vehicle technologies, both electrified and more modern combustion, under government aid plans.
“We are disappointed to see that several of the renovation plans focus exclusively on electric vehicles, which represent a small, although growing, share of the total market,” laments the Dutchman.
In this sense, it is committed to a “strong boost” to the market in conjunction with sales of models that comply with the latest standards (Euro 6d Temp) in order to progressively reduce CO2 levels. In addition, it demands that heavy vehicles be included in the incentive plans. In Spain, Plan Renove 2020 is endowed with 250 million euros, of which 230 will be used to change the fleet of cars (200 million), commercial vehicles (25 million) and motorcycles (5 million), while the acquisition of industrial vehicles and buses it will be promoted with 20 million.
“If we want to see the definitive leap forward in electric cars, a dense network of recharging points across the EU is needed, along with sustainable financial aid (over time), so that zero-emission mobility can become a accessible and affordable option for all Europeans. We will need an unprecedented regulatory change to ensure that all factors are ensured, ”Huitema points out.
In this sense, it states that 2.8 million recharging points are needed in Europe to meet the CO2 targets imposed by the EC. In Spain, the Executive aims to reach a mobile fleet with 250,000 electricity by 2023 and achieve five million units by 2030. To do this, it ensures that more than 100,000 charging points will be deployed. The country currently has 7,879 public charging points, according to Anfac.