Europe's Proposed ICE Ban Already Hitting Vehicle Sales: JatoEurope's Proposed ICE Ban Already Hitting Vehicle Sales: Jato

Rising vehicle prices are threatening the viability of Europe’s automotive industry as automakers struggle to maintain sales.

That’s the opinion of Jato Dynamics’ latest white paper that discusses challenges facing the continent’s automakers that show little sign of going away.

Its study, Rising Car Prices and Their Impact on Europe’s Automotive Industry, reveals that registrations of new passenger cars across 28 European markets totaled just 9.74 million units during the first three quarters of 2024.

This is far short of the 12.11 million units registered during the same period in 2019, with the gap increasing further to 2.55 million units when compared with 2018 levels.

It suggests that the looming threat of the 2035 European Union mandate that all new cars sold must be zero tailpipe emissions is already causing car prices to rise across the region.

With consumers encouraged to make the shift to battery-electric vehicles, China has taken the opportunity to introduce a wave of affordable electric alternatives. Having secured its supply chain to produce batteries, China is able to produce competitively priced BEVs in Europe. According to JATO Dynamics’ data, of the 7.2 million BEVs sold globally between January and September 2024, 4.1 million of them were sold in China and 3.7 million were sold by Chinese manufacturers.

By comparison, the average retail price of a car in Germany today is €56,735 ($59,395). This is more than the average German employee makes in a year before tax of €51,900 ($54,334), according to the Federal Statistical Office.

There is a similar story of high average retail prices across the other four big markets in Europe. In France, the average totaled almost €49,000 ($51,298), Spain €54,000 ($56,532), and Italy €56,000 ($58,626). In the U.K., the average retail price of a brand-new car is €59,360 ($62,143) at the November 2024 exchange rate.

ICE vehicles are also central to the price increases seen in four of the five countries. In Germany, while BEV prices increased by 5.2% between 2019 and 2024, prices of ICE vehicles increased 26.1%. In Spain, BEV prices have increased 1.9% while ICE prices have increased 17.7%. In the U.K., BEV prices have increased 16.5% and 29.4% for ICE.

In France, prices for electric cars decreased 6.4% over this time, while combustion-engine vehicles increased 10.4%. The only exception is Italy, where BEV price increases (31.5%) outpaced those seen in ICE cars (18.4%).

Felipe Munoz, global analyst at Jato Dynamics, says, “Europe is a mature automotive market and therefore years of extreme growth are an event of the past."

However, while the automotive market has typically demonstrated a cyclical nature, current weak performance and high price tags are not a natural response to years of crisis, but rather evidence of a deeper-rooted problem.

“The rising prices of ICE vehicles comes in contrast to what many believe: that the arrival of more electric cars is the driving force behind Europe’s pricing problem. However, with just 10 years until the EU’s 2035 deadline, it is alarming that BEVs still account for only 15% of total passenger car registrations in Europe. This presents a different

problem entirely, reflecting a potential disconnect between those setting the policies and those working across the automotive industry."

Munoz concludes: “Until now, European OEMs may have been able to remain profitable despite higher prices. However, the emergence of China as an automotive superpower has changed the game and they must now look for new ways to reduce their prices in an increasingly competitive market, or risk extinction.”