The Portuguese automotive manufacturing industry’s exports are predicted to fall in November and December, as demand for new cars slows across Europe.
Automotive manufactuting plants are closing in Germany and Belgium, with job cuts planned for major industry giants as well as managerial resignations, such as in the case of the Portuguese former CEO of Stellantis, Carlos Tavares.
After facing disruption during the pandemic, the European automotive industry is once again in dire straits. Difficulties in the transition to electric cars, increased Chinese competition and decreasing sales are all contributing to the crisis. The Portuguese industry is set to be hugely affected, given that 98% of cars in circulation in Europe have at least one component manufactured in Portugal.
“In the case of lower demand or even a recession in the car market, component suppliers naturally experience a decline in demand for their products. This is particularly significant for Portugal, which has a robust and significant component manufacturing industry,” Helder Pedro, Secretary General of ACAP (Automobile Association of Portugal) told Euronews.
The impact will be felt above all by component manufacturers, which in Portugal are represented by the Association of Manufacturers for the Automotive Industry (AFIA).
The sector consists of around 350 companies and has real economic significance. It employs 64,000 people and had a turnover of more than €14 billion in 2023.
After two months of decline, Portuguese automotive component exports grew by 2.6% in October compared to the same period last year. However, an annual increase is not expected to materialise.
“Exports are expected to decline in November and December, leading to a decrease in our activity. This means we could see a maximum drop of between 4.5% and 5%. On a more optimistic note, the decline could be limited to 4%, which would be quite favourable given the current economic situation and outlook in Europe,” AFIA president José Couto predicts.
The chairman of the board of directors at Microplásticos, a components manufacturer, also believes that it will be impossible to sustain the aforementioned 64,000 jobs.
“There will have to be a readjustment. In other words, demand is clearly falling in Europe. Even if other markets are found, there will still be a loss in production capacity,” he says.
Sales have yet to slow down in Portugal
For the time being, Portugal’s automotive market has yet to hit the brakes, growing by around 4% since last year. However, it has yet to reach pre-pandemic sales levels.
The European Union wants to end the production of CO2-emitting cars by 2035, though sales of electric cars are still hampered by purchase costs and subpar electric charging infrastructure.
It is a “regulatory framework that is too restrictive compared to our competitors” in other countries, such as the US or China, says José Couto, arguing that “the difference between the carbon footprint of European manufacturers and that of manufacturers from other regions leads to unfair competition”.
For the AFIA president, Europe must react and invest in training to meet the challenges of electrification and compete with a China, which “is now ahead of us in terms of electric vehicle technology,” argues Couto.
