Stellantis President John Elkann and Renault CEO Luca De Meo said in an interview with Le Figaro on Monday that the fate of the European automotive industry is being played out this year. Both are pleading for Europe to rediscover its origins: the popular and affordable car. They say that a radical and fast simplification of regulations is the key to this.
“This year, for the first time, China will produce more than Europe and the United States combined. 2025 is a crucial moment”, said Elkann. “The current market level is a disaster, there is a strategic issue at stake for the States too, the sector represents 400 billion in tax revenues in Europe”, underlined De Meo.
“The European market has been in free fall for five years now; it’s the only big market that hasn’t recovered from COVID-19,” explains Elkann. “In 2019, Europe sold 18 million cars, now hardly 15 million. At this rhythm, the market could be halved in one decade.”
Two schools of thought
“There are two schools of thought in Europe,” says de Meo. “There’s Stellantis and Renault Group, representing 30% of Europe’s market, wanting to produce popular cars in Europe for Europe. And there’s the line of thought of the premium brands who certainly care about Europe but see export as their priority. For 20 years, their logic steered the market regulations.”
De Meo adds that this has consequences: “European regulations made our cars ever more complex, heavier, and more expensive. And now, we see that normal people can’t afford them anymore.”
“Between 2015 and 2030, the price of a Clio will have risen by over 40%, and that’s for 92.5% due to regulation.” Both remember Italy, for example, in the eighties: a market where three out of four cars were shorter than 4 meters. In Europe, the share of this sort of car has fallen from 50% to 5%.
Fight for the popular car
De Meo and Elkann say France, Italy, and Spain must fight for the return/rehabilitation of the popular car. “These are the countries most concerned. They bought these cars, and their factories made them. Together, they weigh more than Germany, production-wise. These countries must prioritize promoting their industry,” adds Elkann.
“We want different regulations for smaller cars,” explains de Meo. “Too many rules are made for larger and more expensive cars. It’s not possible to treat a 3.8 m car like one of 5.5 m, but regulations do so. There’s no money to make on small cars this way.”
The Renault boss uses various examples to prove his point: “Is it really necessary to have a costly system to prevent trespassing on white lines when a car spends its life in cities? My R5 has to react in the same way as a luxury sedan with three times the frontal area on an impact. Am I supposed to produce a hood in tungsten?”
Both industry captains point at the Japanese ‘Kei’ cars to show that small cars can be very lucrative too. In Japan, they have 40% of the market, thanks to regulations specially made for them by the municipalities.
European simplification
Elkann and de Meo want Europe to react urgently. The new direction has to be making it simple. The problem is that Europe says a lot but doesn’t act accordingly, and the two CEOs criticise it. “Europe has to implement a powerful simplification agenda,” they ask urgently. “Currently, 100 new regulations are coming between now and 2030. They will make cars 40% more expensive again. Five general directories have something to say, and sometimes, they contradict each other.”
“In its just cause for a better environment, Europe has focused on new cars only. But isn’t it as crucial for our environment to replace 250 million polluting vehicles with an average age of 12 years? Europe has thought for too long that the energy transition to electric cars was the miracle solution.”
De Meo identifies three objectives: “First, new regulations only apply to new cars; second, regulations should be in packages, not for a new one every month; and third, we have to be able to talk to one decisive instance inside the commission.”
“What we want are fast and sure decisions. So we can adapt ourselves and implement them as soon as possible. Strong industry policies are installed in China, the U.S., and the emerging countries. In Europe, we have 27 members to deal with, and a Commission that doesn’t have the will or the capacity to act,” Elkann confirms.
“All the countries in the world with an automotive industry are protecting their markets, except Europe,” de Meo adds. He asks Europe to put regulators, industry engineers, and scientists at the same table to create workable standards for the future.
Now is the time to act
“2025 is a turning point,” both car bosses warn. “The Chinese car market will surpass that of the U.S. and the EU combined. Europe has to choose between becoming simply a market or remaining a region where the automotive industry can flourish. In five years, it will be too late. The fate of the European car industry will be decided now, in 2025.
