Six in 10 used car dealers believe at least one existing major European car maker will be driven out of business in the next 10 years.
Likely causes reported in April’s Startline Used Car Tracker include the cost of investing in electrification, mentioned by 40% of dealers, and their inability to compete with low-cost vehicles from Chinese new entrants (32%).
Also, 26% think they won’t be able to keep up with important new technologies such as self-driving cars, while 10% say established manufacturers will be harmed by buyers becoming less brand conscious.
However, other dealers who took part in the survey are more optimistic – 21% believe European car makers will survive through mergers or acquisitions, 18% that they are already becoming more competitive with Chinese companies, 18% that brand and design strength will save them and that 8% that tariffs and other protections will prove effective.
Paul Burgess, CEO at Startline Motor Finance,went on, “The level of competition in the new car market prompted by new entrants alongside the very high degree of investment required to electrify means this might be the toughest moment many long-established and storied European car makers have faced in living memory. They are under huge pressure.
“Our research shows a majority of dealers don’t believe all these companies will survive into the mid-2030s as a result. However, others think mergers and acquisitions, market protections and sheer brand strength will play a part in their preservation.
“It’s also interesting that almost one in five believe European car makers are already becoming more competitive with their Chinese counterparts and certainly some, such as Renault and BMW, appear to be successfully embracing electrification as an opportunity.”
The Tracker research also asked whether Japanese and Korean car makers were as much under threat as European ones – with 49% of used car dealers agreeing.
Paul concluded, “The disruption we are seeing affects all established manufacturers and it is not just European businesses that are facing an existential crisis.”
Historically, the motor industry has faced serious challenges ever since it was created and mergers or acquisitions are commonplace and continue today. Bigger groups may look safer but at the same time can be vulnerable to sales slowing in a particular sector where they have more than one brand.
The political influence behind regional brands has also seen Governments stepping in to assist when a car maker with tens of thousands of jobs – and hence votes – pleads for help. Continental car makers are always a case in point.
