Europe's Carmakers Face Reckoning as Brussels Mulls Industry Rescue

European automotive manufacturers confront mounting pressure on multiple fronts, with the European Commission's anticipated support package now delayed amid fierce debate over the bloc's 2035 combustion engine phase-out.

Brussels was expected to unveil comprehensive measures on December 10 to shore up the continent's struggling automotive sector, but Transport Commissioner Apostolos Tzitzikostas indicated the announcement could slip to mid-December or even January. The delay reflects the complexity of balancing climate commitments against industrial competitiveness concerns, particularly from Germany, where nearly 50,000 automotive jobs have been shed this year alone.

The sector's woes extend beyond regulatory uncertainty. Stellantis, Europe's second-largest automotive group, reported a 70 per cent decline in net profits for 2024, prompting new chief executive Antonio Filosa to review the viability of all 14 brands in the conglomerate's portfolio. Struggling marques including DS Automobiles, Lancia, and Maserati face potential elimination as the group wrestles with inventory bloat and weakened demand.

Meanwhile, Mercedes-Benz stands as the only major European manufacturer unable to meet the EU's 2025-2027 emissions targets independently, forcing it to purchase carbon credits from Volvo Cars and Polestar. BMW, Volkswagen, and Renault are positioned to comply, though Volkswagen maintains no margin for error.

The European automotive parts supplier association CLEPA warns that without decisive action, the region faces a 35 per cent cost disadvantage compared to Asian competitors, potentially eliminating 350,000 jobs by 2030. Rising energy costs, material prices, and regulatory burdens have eroded profitability whilst Chinese manufacturers capture market share with competitively-priced electric vehicles.

Industry leaders, including the European Automobile Manufacturers' Association, advocate for greater flexibility on the 2035 target, urging Brussels to permit plug-in hybrids and highly efficient combustion engines beyond the deadline. Germany's government has formally requested such concessions, with Chancellor Friedrich Merz's proposals reportedly receiving a positive reception in Brussels.

Yet environmental groups warn that watering down emissions targets would surrender Europe's position in the global electric vehicle race to China, which commands a 30 per cent battery-electric vehicle market share compared to Europe's 16 per cent through October 2025.