Sales of autos in Europe dropped by 8.4% in December compared to the same time in 2017 according to
ACEA (French acronym for European Automobile Manufacturers Association). This continued the
negative sales trend which started in September.

Source: ACEA

For the full-year sales were stagnant compared to 2017 at 15.1m cars. There were some increase in auto-sales prior to 1st of September as car makers’ front loaded sales prior to implementation of new environmental regulation.

Of the 4 biggest countries Germany, UK, France and Italy, sales only increased in France in 2018. December numbers show much more dire numbers as high declines in all markets except slight increase in Italy.

Almost every single manufacturer had large declines in sales in December. Volkswagen sale dropped 8.7%, Renault declined by 16.6% and the Japanese manufacturers Nissan and Toyota had declining sales of 30.5% and 10.2% respectively.

Low interest rates on consumer loans have helped buyers around Europe to purchase cars over the last couple of years. Lower rates seem to have lost their effect as demand dried up.

The Auto industry provides jobs for 12 million people and accounts for 4.0% of EU’s GDP. Continued decline of sales and the industry would be detrimental to the whole EU economy.       

Already some Automakers are announcing job cuts. FT reports;

Ford will lay off thousands of workers and slim its vehicle line-up across Europe as the US carmaker pushes ahead with a $14bn global cost-saving plan.

Jaguar Land Rover will cut 4,500 jobs as Britain’s largest carmaker seeks to revamp its business amid falling demand for diesel and a decline in the Chinese market

As this were enough, U.S. is looking to put further tariffs on automotive sector. Reuters writes;

U.S. President Donald Trump is likely to move ahead with tariffs on imported vehicles, a move that could prompt the European Union to agree a new trade deal, said Senate Finance Committee Chairman Charles Grassley on Wednesday.

“I think the president’s inclined to do it,” the Republican senator told reporters. “I think Europe (is) very very concerned about those tariffs … It may be the instrument that gets Europe to negotiate.”

The U.S. is looking to have EU open its agriculture market.  The EU has made it clear that they are not going to negotiate/open EU agriculture market. The sector interest are very powerful. It appears even less likely for any opening post the yellow-vest protests in various European countries.      

With the possibility of hard Brexit, Chinese economic slowdown hitting auto sales, and now further U.S. tariffs the risk for collapse of EU auto-industry is high. Any continued decline would further create stress in the EU economy, pushing it closer to further economic decline.