European Automotive Industry Faces Strategic Challenge

Providing six per cent of the overall employment and an annual added value of EUR 114 billion, the European automotive industry is an important driver of the European economy. Its global competitiveness is inseparably linked to its technological performance.

A study conducted by the Centre for European Economic Research (ZEW), Mannheim, on behalf of the EU Commission shows that new propulsion technologies play a key role in this context. Fuel costs are rising and there is still a strong need for private and business mobility. For this reason, automotive customers around the world are beginning to call for fuel-saving cars. Experts agree that cars will run on hydrogen in the long term. But until this technology can be used on a large scale, we will have to find a petrol-saving temporary solution. A worldwide accepted technology is not yet available. Europe seems to have decided for diesel engines whereas in the U.S., hybrid vehicles, which combine the traditional petrol engine with an electric motor, are the preferred solution.

The different trends of two important sales markets are a strategic challenge for the European car manufacturers. The question is whether they will focus their research activities on further boosting diesel or on trying to catch up in the hybrid sector instead. The U.S. market has a high importance to most European premium providers and the diesel filling-station infrastructure is insufficiently developed there. Hence, it seems unrealistic for them to turn away from hybrid technology. But the amount of sales makes clear the trend. The B&D Forecast institute expects that in the U.S., hybrid car sales will not reach three million until 2015, whereas in the EU-15 alone, almost 14 million diesel vehicles were sold in 2003. According to the ZEW study, European car manufacturers need a balanced innovation strategy. This means that some providers might only be able to maintain their hybrid options by collaborating with other manufacturers or licensing, because research on other fuel-saving potentials (such as cylinder deactivation) must not be neglected either.

Contact

Dr. Oliver Heneric, E-Mail: heneric@zew.de

Dr. Wolfgang Sofka, E-Mail: sofka@zew.de