How the government can help mobilize Europe’s automotive industry

In 2022, China surpassed Germany in light-vehicle exports for the first time.

Europe has led the automotive industry for years, but market entrants have challenged this status quo, McKinsey & Company said, calling for actions not only from the industry but also from the government.

For instance, China, the largest automotive market, surpassed Germany in light-vehicle exports for the first time in 2022. Records showed that China saw exports of about 3 million vehicles, higher than Germany’s 2.6 million.

“These transformative forces overlap with a challenging macroeconomic environment in Europe, including rising energy costs, inflation, and geopolitical tensions,” the report read in part.

“A prosperous future for the European automotive industry will therefore depend on how well and quickly it responds and how European stakeholders can shape the necessary conditions for future success. The need for action is urgent.”

Action for the government may be in the form of policy support for advanced driver assistance systems (ADAS) features, which have become increasingly important. McKinsey found that 51% of consumers worldwide have considered switching to cars with ADAS features.

“The right regulatory environment could be critical to enable this kind of cross-industry collaboration. Public-sector stakeholders could consider adapting existing guidelines to the context of autonomous driving,” McKinsey said.

Additionally, the European industry may look at cross-industry collaboration, particularly in standardising sensor communication protocols and creating a more robust development process.