Spotlight falls on European car industry challenges in Paris

The S&P Global Mobility AutoIntelligence service provides daily analysis of global automotive news and events. We deliver timely context and impactful analysis for navigating the fast-moving industry. Behind the Headlines offers a regular dive into recent top stories.

The Paris Motor Show made its return to the exhibition center in Port de Versailles for this biennial event last week. While there were not quite so many automakers in attendance as at the events prior to the COVID-19 pandemic, the OEM support for the event is far better than it was in 2022.

In 2024, the theme seemed to be new energy. Many automakers unveiled new products that represent current trends in Europe and reflect some of the key issues facing the automotive sector in the region.

As ever, the local brands were out in force, which is unsurprising given that Peugeot, Citroën, Renault, and adopted brand Dacia occupied four of the top five passenger car brand slots in France during the first nine months of 2024. Three of these four brands' product announcements were focused on the expansion of their battery electric vehicle (BEV) portfolio; many automakers are staring down the barrel of being unable to meet new EU light-vehicle CO2 targets, which will be introduced from 2025.

Peugeot only showed enhancements to its current lineup of vehicles, such as the long-range versions of the battery electric e-3008 and e-5008 alongside the new battery electric e-408. However, its Stellantis stablemate Citroën showed a concept of the next-generation C5 Aircross that will incorporate a battery electric powertrain for the first time; it uses the same STLA Medium platform as the new Peugeot 3008 and 5008. This platform will become a key architecture used by Stellantis's European compact and mid-size product lineup in future.

Unlike Stellantis, Renault Group is hoping that standalone BEV models rather than vehicles based on existing passenger cars will help to encourage customers to make the transition from internal combustion engine (ICE) powertrain products. For its latest launch, the company has delved into its back catalogue of fondly remembered models, with the Renault 4 E-Tech sub-compact crossover reviving the memory of the Renault 4 that was built between 1961 and 1992. It follows in the footsteps of the Renault 5 E-Tech sub-compact hatchback that was launched at the last Geneva Motor Show (Switzerland) in February, with both using the modern AmpR Small platform and cutting-edge technologies, wrapped in retro-familiar styling.

Other new BEV products that were unveiled in Paris include Renault Group's Alpine's A390_β concept, which previews a new mid-size crossover that will go some way towards expanding the brand's presence in the marketplace when it is officially launched in production guise next year. The vehicle will also help its parent company capture customers at a higher price point. At the same time, Audi showed its rakish Audi Q6 e-tron Sportback mid-size battery electric crossover, while BMW Group's Mini revealed a higher-performance John Cooper Works Electric variant of the Aceman crossover alongside the similarly modified Cooper hatchback.

Products introduced at the event also highlighted how OEMs are using the crossover and sport utility vehicle (SUV) body styles to expand their lineups and win over customers. As well as many of the battery electric products noted before, other launches featured internal combustion engine (ICE) powertrains. This includes Dacia unveiling the Bigster, which will broaden the brand's lineup as its largest model to date. The Volkswagen (VW) brand brought the Tayron to market, a new spacious crossover that will sit between the Tiguan and Touareg in its range in Europe.

Alongside European automakers, several Chinese automakers have revealed products that will support their respective pushes into the European market. These include BEVs as well as SUVs across multiple fuel types. A notable presence among this group is Leapmotor, which formed part of Stellantis's presence at the event thanks to its investment in the Chinese automaker and its majority shareholding in the Leapmotor International joint venture (JV). As well as displaying the battery electric T03 city car and C10 mid-size crossover which are the first models that it is selling in Europe, it also made the global debut of the new battery electric B10 compact crossover. Although few details have been made available, we do know that it will be underpinned by Leapmotor's new LEAP 3.5 architecture, which integrates advanced driver assistance systems (ADAS), a customizable digital cockpit and "intelligent driving capabilities."

Another brand hoping to generate interest in their new products before fully entering Europe is GAC Group, with its AION V battery electric compact crossover, while BYD has revealed it will flesh out its own lineup in the region with the larger Sealion 7 battery electric crossover that will come as it expands its retail network in the region during the next year or so. Xpeng and Skywell also made reveals and debuts at this event.

The push by Chinese automakers is continuing despite the European Commission's anti-subsidy investigation into BEVs imported from China, which is on course to impose tariffs of between 7.8% and 35.4% on top of an existing 10% passenger car import tariff from November 2024. S&P Global Mobility forecasts that tariffs will dampen imports of Chinese-built passenger cars to the EU compared with our expectations before the provisional tariffs were announced; we still expect volumes to grow for several years to come due to a combination of a growing number of brands and products being introduced from China, as well as some expected BEV shipments being replaced by other powertrain types.

Our current forecast shows that 508,700 passenger cars built in China were registered in the EU during 2023, which will rise to 563,100 units in 2024. However, we expect a surge to 812,700 units in 2025 and they will reach a peak of 977,600 units in 2027 before sliding back in the years beyond. Part of the reason for this is sourcing for these vehicles is changing, helped in part by investments being made in and around the EU under pre-existing plans. This includes BYD's plans to build vehicles in Hungary and Turkey.

Looking at the wider EU passenger car market, S&P Global Mobility is anticipating an easing of the EU's CO2 targets toward 2035, as well as a delay to the effective end-of-sale deadline for ICE passenger cars until 2040. In the nearer term, we are currently forecasting that passenger car registrations in the EU will rise by a modest 1.9% year over year to 10.80 million units in 2024. Registrations this year are also forecast to be about 12.5% below the five-year average between 2015 and 2019, prior to the disruptive events of recent years. We now also expect passenger car registrations in the EU to remain under 11 million units in 2025.

Get a free trial of AutoIntelligence

Watch our webinar on the 2024 Paris Motor Show

This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.