BRUSSELS—Five major European industry associations have jointly sounded an alarm, saying rising energy and production costs pressures weighing on the European Union’s automotive industry could have severe impacts.
Without “significant political action” to address the issue, it will become “increasingly difficult to make the case for manufacturing and investments in the EU,” said the group, which includes the European Tyre & Rubber Manufacturers’ Association. “Additional political initiative is urgently needed to avoid new import dependencies and to ensure access to affordable energy.”
Other associations joining ETRMA in raising the red flag about the economic pressures are the European Automobile Manufacturers’ Association (ACEA), the European Council for Motor Trades and Repairs (CECRA), the European Association of Automotive Suppliers (CLEPA) and European Tech & Industry Employers (CEEMET).
Spelling out the challenges currently faced by the industry, the associations said rising energy prices, coupled with high costs of raw materials and other components, were negatively impacting the sector as well as customers.
“Costs of production are therefore skyrocketing, undermining profitability and putting investments and the very survival of critical industries within the automotive ecosystem at risk,” the organizations said.
Long-term, they said, the automotive and tire industries cannot absorb such high costs, especially in the face of competition from other major markets such as the U.S. or China.
In the case of the U.S., particularly, European energy costs are about seven to eight times higher than America’s. This, the associations warned, could undermine the EU car industry’s competitive edge. “A comprehensive and coordinated policy response” is required to as a result, they said.
Additionally, the group said that high costs also jeopardize employment in an industry that supports 11.5 percent of EU manufacturing labor, which also called for equal conditions across the EU.
“Single market and state aid rules must not undermine fair competition between production sites in different member states,” a statement from the group said, noting the “essential role” of the European Commission in this area.
The European automotive industry employs more than 13 million people and provides About $373 billion in tax revenue for European governments in major markets.
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