The second decade of the 21st century can be described in one word: unexpected. From economic challenges (the resurgence of inflation), health crises (the COVID-19 pandemic), and geopolitical conflicts (wars in Ukraine and the Middle East) to severe climate events, the optimism of the late 20th century has given way to a pervasive sense of insecurity. Consequently, affordability and security have become top priorities for both the public and their elected representatives.
In showrooms, declining consumer confidence has left car manufacturers struggling, with new car sales in the EU falling month after month — a decline of 16.5% in August 2024 alone. This trend is also hindering the growth of electric vehicles (EVs), with the annual growth rate of battery electric vehicles (BEVs) halved this year, unlike hybrids, which are making a strong comeback.
Sales records from 2019 seem unattainable now. Profits are starting to wane, and manufacturing lines are experiencing overcapacity, signaling potential plant closures in the West and massive discounts for Chinese-made cars, both domestically and abroad. The mid-term targets for EV dominance by 2030 or 2035 now appear more distant.
The automotive industry’s focus on SUVs — prioritizing higher individual margins — has further narrowed the customer base, pushing minimum selling prices to around €35,000, nearly equivalent to a year’s average income in France. This trend is also affecting EVs, complicating their path to widespread adoption. Challenges such as range limitations, insufficient charging infrastructure, reliance on government incentives amid tight budgets, and potential job losses (over 10% of the automotive workforce may be at risk due to the shift from internal combustion engines to electric power) add to the difficulty.
Is there any hope for a revival?
Perhaps, and surprisingly, it might come from younger generations, often portrayed as climate-conscious. A recent study across 14 countries found that 60% of people under 30 cannot imagine life without owning a car, even if they also use bikes, car-sharing, or work remotely. Nearly half believe cars will play an even larger role in the future. However, the primary barrier is the high purchase price. Young adults in the EU, upon obtaining their driver’s license (typically before age 20), are more likely to buy a second-hand car, usually a traditional internal combustion vehicle, despite 60% of them believing that the future of mobility is electric.
Car manufacturers may need to rethink their strategy and pay more attention to this overlooked segment. Adapting their offerings could help meet stricter emissions regulations by increasing the volume of EV sales, compensating for the higher emissions of larger SUVs. It could also provide competition in the smaller vehicle segments, currently dominated by Chinese models.
Could nostalgia be the key? The “Back to the Future” DeLorean remains popular, and while MG is now a Chinese brand, it still evokes the spirit of the classic British roadsters. Similarly, Mini Cooper (now part of BMW Group) and the Fiat 500 in Italy appeal to vintage sentiments. In France, iconic models from the 1970s like the Renault R4 and R5 are making a comeback — this time as electric versions.
Do the new R5 models resemble their predecessors from 50 years ago?
Clearly, there are significant differences. Performance, safety, and comfort have all improved over the decades, but so has the weight and price. The new R5 weighs twice as much as its original counterpart, and the relative cost has also doubled. In 1972, the R5 could be purchased for the equivalent of six months’ average salary. Today’s “neo-vintage” model costs at least twice that, translating to 18 months’ income for a young adult.
In the 1970s, the R5 was a hit with young people eager to drive stylish, fun cars, distinct from the more conservative vehicles of their parents. Will this appeal translate to the 21st century? Although Renault has promised more affordable versions, will young, globalized customers choose a local brand over more affordable EVs from competitors like BYD and MG, which offer the latest tech features — essentially “computers-on-wheels”?
An aging but affluent population in the West may provide some relief for car manufacturers, but long-term viability depends on accessibility across all age groups. Without it, the automotive industry — born in the 20th century — may face a slow decline in the 21st.
Philippe Marchand is a Bioenergy Steering Committee Member of the European Technology and Innovation Platform (ETIP).
