1、The European automotive industryUnlikely to returnto normalGlobal Strategy Group2Document Classification:KPMG Public 2023 Copyright owned by one or more of the KPMG International entities.KPMG International entities provide no services to clients.All rights reserved.Has the traditional auto sector p

2、eaked?A perfect storm is brewing Recessions come and go,yet the automotive original equipment manufacturer(OEM)sector has continued to grow.And that has placed the focus on building up capacity and harnessing process efficiency.Now,growth no longer looks so certain.In fact,we believe that the automo

3、tive OEM sector has entered a period of decline and disruption.Emerging out of the pandemic is a perfect storm that threatens to change the fortunes of the automotive industry.In our view,five key factors are driving this perfect storm:Drop in demand:Increasing economic uncertainty could mean post-p

4、andemic demand never materializes.Socio-demographic change:Aging populations and declining purchasing power could slow new car sales.Shift to electric vehicles(EVs):The move to EVs is expected to reduce labor intensity and erode market value for traditional OEM suppliers.Suppliers near peak debt:The

5、 majority of traditional OEM suppliers could face financial distress.Price parity comes early:Inflation and rising costs could affect the internal combustion engine(ICE)and EV market differently.12345Market size forecast for passenger cars in Europe(excl.batteries)20192035,in constant(2010)EUR billi

6、onsStrategic implicationsThe automotive industry is expected to shrink,kicking off a period of decline.In our view,survival cannot be achieved through financial restructuring alone given the foreseeable scenario.We believe there will be a need for an operational restructuring within the automotive i