Every euro invested by European vehicle makers results in over 2.5 value added for wider economy, study finds

The European automotive sector has long been a key cornerstone of the European economy, its production and activities closely intertwined with other key industries. The relevance of the industry to other sectors cannot be underestimated, with European vehicle manufacturers making up 40% of European semiconductor demand, 75% of European battery sales and the wider automotive sector adding more than €1.7 trillion in gross value to the European economy.

A new report from McKinsey has underlined its significance, finding that every euro invested by the European automotive industry results in 2.6 times the value added for the wider European economy. 

The McKinsey report “European Automotive Industry: What it Takes to Regain Competitiveness”, commissioned by the European Automobile Manufacturers’ Association (ACEA), analyses key disruptions to the automotive manufacturing industry and suppliers. 

Citing five disruptions undermining the automotive sector’s competitive edge, including geoeconomics, rising uncertainty in powertrain technology, changing customer behaviour for digital services, evolving software and advanced driver assistance systems (ADAS) and the growth of the Chinese market challenge, the paper highlights eight recommendations on how the automotive sector can “bounce back”. 

Automotive manufacturers and their suppliers can implement a wide variety of measures, but the key focus should be on a new era of collaboration, according to McKinsey. By focusing on these actions collectively, the European automotive sector can regain its competitive edge, remain an economic powerhouse vis-a-vis other regions in the world.

You can consult the study, including the eight recommendations, here: https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/european-automotive-industry-what-it-takes-to-regain-competitiveness