Realities on the ground are about survival – CLEPA Newsletter Editorial June 2020

News from Brussels

Source: CLEPA, 2020-06-10

An impressive number of members joined us–on-line–for the CLEPA General Assembly last week and a large part of the agenda was allocated to the fall-out of the Covid-19 crisis. What did we learn? The Covid crisis is heavily impacting us as individuals and society, and rewriting the automotive supply industry’s story book for 2020 and 2021 as well.

It also emerged that uncertainty will remain with us for a while. We can’t fully estimate the ultimate impact of the current crisis yet. No doubt, decarbonisation and digitalisation continue to be the overarching transformative forces of our time. But realities on the ground will be about survival. Will consumer demand develop back to pre-crisis levels, and when? What will consumer preferences look like, for example when it comes to mobility? The CLEPA Covid-19 News Flash contained interesting data on these questions again this week.

Regrettably, the various support packages agreed so far at European level and in major automotive countries like France and Germany have not brought the immediate impulse to kickstart widespread automotive production which we had jointly advocated for.

French and German support packages fall short in kickstarting widespread automotive activity

There are many good points in the announced measures, for example when it comes to sustaining liquidity in the sector, or the reiterated pledges to invest in charging and renewable fuels infrastructure as well as in R&D in the field of new mobility and alternative powertrain solutions. We also support the additional push to incentivise electrified vehicles, both battery electric and plug-in hybrids. But the advanced internal combustion engine is not recognised as a technology solution that can also support the transformation to carbon-neutral transport.

Much of government pondering currently goes into whether crisis aid could at the same time accelerate a shift to electrified vehicles. This pondering makes sense: industry is fully committed to making the transformation a reality and CLEPA analysis of publicly available data suggests that European industry is better positioned in this area than often assumed. The data also shows that the shift to electrification is undoubtedly underway.

However, there are limits to acceleration in the very short-term given production capacity restraints. The immediate market volumes in this segment are too low to trigger the necessary manufacturing activity needed to support the economic recovery. In contrast, complementary solutions, including hybrid technology and renewable low-carbon fuels, do promise the required volumes and will facilitate the breakthrough to electric mobility in an economically and socially viable way.

Lack of economic activity will lead to reduced employment levels and accelerated restructuring in the sector

The risks for supply chain dependencies, European value creation and employment should be considered as well. The lack of economic activity in the remainder of this year will reflect itself in reduced employment levels and accelerated restructuring in the sector. Ringing the alarm bell, CLEPA and the other European automotive sector associations published a joint statement recently with IndustriAll, the federation of trade unions.

As CLEPA, we’ve had important high-level meetings over the past weeks with the European Commissioners for Industry, Jobs and Climate, and we are continuing these in the weeks to come. In close cooperation with the national associations, we are advocating our case at national level as well. The opportunity for a Europe-wide approach to kick-starting automotive activity, safe jobs and secure EU competitiveness is still very much open. However, time is of the essence. The stakes are very high.


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