(Bloomberg) -- Car sales in Europe are flatlining, leading manufacturers including Ford Motor Co. and Volkswagen AG to push for cost cuts in response to muted demand.
New-car registrations inched up just 0.1% in October compared to a year ago, to 1.04 million units, the European Automobile Manufacturers’ Association said Thursday. Declines in France, Italy and the UK largely canceled out expansion in Germany, the region’s biggest car market.
Automakers have struggled to grow sales in Europe as the transition to electric vehicles stumbles and a cost-of-living squeeze crimps budgets. Ford on Wednesday announced plans to cut another 4,000 jobs in the region, about 14% of its local workforce. Volkswagen is pushing for savings measures including unprecedented plant closures in Germany.
Although EV sales rose 6.9% last month, they remain down for the year after policymakers reduced support for EV purchases. The UK, where registrations jumped 24% in October, has been a bright spot as manufacturers offer significant discounts to meet the government’s zero-emissions vehicle sales mandate.
In Germany, where Chancellor Olaf Scholz’s government scrapped aid late last year, EV sales declined 4.9% in October, and are down more than a quarter after the first ten months. Porsche AG and Mercedes-Benz Group AG have dialed back their EV ambitions in recent months, citing slower-than-expected momentum for plug-in models.
While the German government has been weighing reintroducing some aid to support its beleaguered carmakers, it’s unclear whether it can go ahead after Scholz’s ruling coalition collapsed, inhibiting its ability to act decisively before early elections.
A Europe-wide EV downturn increases the risk that manufacturers including VW, Stellantis NV and Renault SA will end up having to pay billions of euros in fines if they fail to meet stricter fleet-emission rules set to kick in next year.
Buyers instead are gravitating toward hybrid vehicles powered by a combustion engine and a smaller battery, benefiting manufacturers led by Toyota Motor Corp. Sales of hybrids rose 16% last month.
Volkswagen, which is locked in negotiations with unions over widespread cost cuts in Germany, saw registrations increase 13% in October. Stellantis’s sales declined 17% in the same period.
--With assistance from Craig Trudell.
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