The insurer Crédito e Caução forecasts a 0.6% contraction in European automobile production in 2026, which would represent the third consecutive year of decline. Recovery is estimated at 1.2% for 2027.
Among the factors affecting production are trade protectionism, the uneven transition to electric vehicles and weak consumer confidence. The sector is also highly exposed to geopolitical tensions, as demonstrated by China's announcement to impose strict controls on rare earth exports, which highlighted the vulnerability of Western manufacturers due to their high dependence on critical minerals.
The industry's evolution is also linked to household purchasing power, reduced by the effects of the Middle East conflict and new tariff rates. Adding to this is the loss of competitiveness of European manufacturers in electric vehicle production, which are gaining market share. The report estimates that global hybrid and electric vehicle sales will represent 59% of light vehicle sales by 2030, compared to the 10% recorded in 2020.
Combustion engine parts manufacturers will have to adapt or face extinction. In this scenario of uncertainty, falling demand and loss of competitiveness, margins are decreasing and payment delays and insolvencies are increasing. In Germany, manufacturers are implementing significant cost-cutting measures, including major job cuts, and banks are increasingly restrictive in granting loans to sector suppliers.
