The European automotive industry is projected to see a slow recovery in 2025, following a significant decline in 2024. This outlook was shared by EUROFER, the steel industry association, in its Economic and Steel Market Outlook for 2025-2026, Q1.

Car production in the EU is expected to grow by 2.1% in 2025, although this will still be considerably lower than pre-crisis levels seen in 2019.

In 2024, the third quarter saw a 12.1% drop in production, while new car sales only increased by 0.8%, reaching 10.6 million units, which is 2.4 million fewer than in 2019. This marks the third consecutive quarterly decline in production, signaling the end of the positive growth cycle that had been in place from mid-2022 to the end of 2023. Electric vehicles (EVs) now account for 13.6% of the market in the EU, surpassing diesel vehicles at 11.9%. However, consumers continue to face challenges with insufficient charging infrastructure.

The forecast for 2025 remains cautious. Following an anticipated 8.4% drop in car production in 2024, a modest recovery of 2.1% is expected over the next two years, though total production will still fall short of the 2019 pre-crisis levels. Weak demand, economic uncertainty, and delays in EV infrastructure development are the key hurdles. The global market situation, particularly in the US and China, along with rising competition from Chinese electric car manufacturers, will be critical factors for European automakers.

In a previous forecast, EUROFER had projected a 1.9% year-on-year increase in car production in 2025, after a 6.5% decline in 2024. A full recovery for the sector will require stable global economic growth, increased demand in international markets, and greater confidence in the future of the EU’s electric vehicle market, according to the association.