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The end of European auto manufacturing

If you’re in Europe, you’ll be nodding your head in agreement by the second paragraph. If you’re outside Europe, some of this might sound familiar but likely the effects of a stagnant European car market are less-known. At a macro level the European car market is motionless. Car sales peaked in 2007 (16 million) and last year they registered 15 million. Worse yet, it’s an overly saturated market where folks still crave smaller cars in a world where manufacturers are increasingly seeking to sell SUVs and pickups. All of this equates to manufacturers eyeing an exit from Europe and this is reshaping the industry at a global level.

So, who’s hitting the road? Honda is one, stating that by 2021 they will be out of Turkey where they employ 1,100 folks and worse yet, have closed their plant in Swindon, England (3,500 workers). Nissan is another, specifically its luxury brand, Infiniti, pulling out of Western Europe and Ford announcing in January it would cut thousands of positions across the larger continent. Jaguar Land Rover is packing their bags, slashing 4,500 workers, the majority of which are British based, and General Motors already exited in 2017 when it sold their former Vauxhall and Opel brands.

A big pressure point is coming from the regulatory/government side with automakers having to respond to costly emission standards (in the wake of the VW diesel-cheating scandal) as well as many prominent cities (London) slapping taxes on drivers of older diesel cars. European governments are increasingly keen on electric, alternative options moving forward which places those manufacturers who have not ramped up quickly enough at a financial disadvantage.

Now that we know folks are leaving, do we know where they’re going? The answer is yes, and it’s China. The electric vehicle (EV)market is more than booming where the government is steadfast on having 1 in every 5 cars running on something other than gas by 2025. Tesla is up and running with a factory, VW already signed an agreement with the Anhui Jianghuai Automobile Group, GM installed a research and development hub and Renault-Nissan and Ford have joint EV ventures … all in China!

Lastly, couple all this with Brexit and the whole scene is getting a bit dicey. Cycles are typical in the auto industry but this one is worrisome. Mass departures take time to recover from, by 2020 we should have a better handle on just how dire this is.   

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