We expect that production of new cars will start growing again.

Despite the doom and gloom surrounding the European automotive sector, we expect that production of new cars will start growing again in the next years, with 2.4% growth in 2026 and 3.8% in 2027.

However, the future is much bleaker than the past—the number of cars produced in Europe will not return to the levels seen throughout the 2000s and 2010s.

What you will learn:

  • We expect that the positive trend will be fuelled by a combination of increasing domestic demand, which should accrue disproportionately to domestic producers, and companies’ progress in the EV transition.
  • One of the key headwinds is the transition to EVs: global demand for cars is being increasingly driven by this segment, and European car producers are lagging their Chinese competitors.
  • The other major headwind is on the domestic demand front. While part of the dramatic drop in car sales since Covid-19 (-19% from 2019 to 2024) is cyclical and will be reversed over the coming quarters and years, a portion can also be attributed to a lasting downshift in demand for cars.
  • Europe used to regularly produce over a fifth of the world’s total cars, but over the long run, will now have to be satisfied with maintaining rather than growing output levels. We expect that it will record a steadily shrinking share of global production over the coming decades, from 15.4% in 2024 to 13.6% by 2050.
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