The economic recession and financial crisis have a ‘devastating’ effect on the automotive industry with serious implications for the wider economy, according to a report by Global Insight commissioned by the European Parliament and seized on by carmakers’ association, ACEA.
ACEA says that the current crisis is threefold in nature: financial, economic and structural:
- Financial: a drastically limited access to credit; and high costs of credits if available, both for the manufactures, their suppliers and for potential buyers of cars and trucks;
- Economic: a dramatic drop in demand for both passenger cars and commercial vehicles;
- Structural: low margins due to an increasingly complex and diverse product portfolio; and an increasingly pressing demand to adapt manufacturing, logistics, vehicles and R&D to meet environmental needs
The report says the automotive industry is the ‘engine’ of the European economy: around one in ten jobs in Europe depend directly or indirectly on the automotive sector; the industry is the largest investor in innovation and R&D and a formidable export force.
Lower levels of automotive manufacturing in Europe have a large spiraling effect on the wider economy because of the thousands of small and medium sized companies involved in the supply chain, vehicle sales and after-sales services, the report says.
The relative overcapacity in the industry, though often cited, is not a reason for the troubles that auto manufacturers are currently facing, ACEA maintains.
The cause of the current crisis is the unprecedented credit crunch and the rapid deterioration of all key automotive markets, the report says.
The report goes on to say that ‘it is most essential’ that EU governments and institutions ensure access to liquidity, through the European Investment Bank and in other ways.
It’s vital that governments stimulate demand for new vehicles with fleet renewal schemes: this will benefit both the economy and the environment, ACEA says.
See the analysis at: ACEA