Automotive News Europe - January 2020 - 8

AUTOMOTIVE NEWS EUROPE

COVER STORY

 Continued from Page 7

Separately, IHS Markit is forecasting a
2 percent decline in EU plus EFTA sales
(Iceland, Norway and Switzerland). "We
are seeing a slight decline," said IHS
Markit analyst Martin Benecke, noting that
formerly strong growth markets in Central
and Eastern Europe are now more closely
tracking Western European countries.
"On the economic side, the ongoing Brexit
uncertainty is holding back investment,
not only in the UK but in other nations,"
he said. On trade issues involving China
and the U.S, "It's not clear what's going
to happen," he added.

Emissions question
But emissions compliance remains the
main question around sales this year,
Benecke said, for a number of reasons.
Model portfolios will change as higherpolluting cars with older technology are
pulled in favor of full-electric cars, plug-in
and regular hybrids, and mild hybrids.
This in turn will increase prices overall,
possibly affecting demand, he said.
Automakers could also push diesel sales,
even though the future of the powertrain
has been in doubt because of fallout from
the Volkswagen Group cheating scandal.
After several years of sharp declines, tied
to a loss of consumer confidence, increasing cost of emissions compliance and
the effects of current and future diesel
bans, sales have stabilized somewhat.
Benecke said IHS forecasts that the diesel
market share in 2020 will be 31 percent,
just one percentage point below 2019's
figure. Nevertheless, the powerplant's
long-term future is in doubt, he said,
because it is increasingly difficult to find
further gains in CO2 emissions.
Another unknown is how automakers will
ensure that enough low-emissions vehicles
are sold to meet fleet emissions targets.
Benecke noted that manufacturers have
many levers to pull because relatively few
cars are sold to private buyers. Those tools
include self-registrations, favorable lease
terms for employees, and sales to shortterm (car-sharing) and traditional rental
fleets. Said Benecke: "They have a lot of
power to bring these vehicles to market."

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Photo: Bloomberg

Moody's is more bearish, predicting that
Western European sales will drop by 3
percent in 2020, revising downward an
earlier forecast. Factors in the slowdown
include uncertainty around Brexit, and a
weakening macroeconomic environment,
especially in Italy and Spain. However,
Moody's noted that the European market
has been at a high level of sales for several
years, and that a slowdown in 2020 would
return the market to 2017 volumes.

Fiat Chrysler will pay Tesla hundreds of millions of euros to join an emissions
pool to benefit from sales of electric models such as the Model 3 (shown).
full-electric compact hatchback. "We will
work hard to be CO2 compliant and we are
pretty sure we will reach all the goals set
for the passenger cars," Jost said.

'Pivotal' model
Indeed, the ID3 is expected to be the
bellwether for mass acceptance of full
electric vehicles in Europe, as its development was supported by billions
of investment from VW Group, and it is
roughly the same size as the VW Golf,
Europe's best-selling car. "The ID3 is going to be kind of pivotal," said Jonathon
Poskitt, LMC's head of global forecasting. "If it doesn't hit the sales it's supposed to, then maybe that's a signal that
the market is just not there yet." Capgemini's Winkler agreed: "It's one of the
most crucial products because it's in the
Golf class," he said of the ID3. "It's a bet
that the ID series will convince a broader
consumer segment" to buy electric cars.
Yasuhiro Aoyama, the head of Mazda
in Europe, which will start selling the
MX-30 full-electric crossover this summer, said the Japanese company was in
a "transition period between two generations of technology. When we have
completed the transition, including the
electrification of our product portfolio,

our goal is to pay no fines for CO2 emissions." He added, "We will have to sell
as many battery-electric vehicles as possible so that we can reduce our potential
of facing a CO2 penalty."
Analysts said some of the tactics to increase sales could include self-registration of slow-selling electric or plug-in

If you are not ready now
in terms of product,
production and stock
management, you will be
dead in January.
-- Peugeot brand CEO
Jean-Philippe Imparato

JANUARY 2020

http://www.autonewseurope.com

Automotive News Europe - January 2020

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