Automotive Industry in European Union

The European Union (EU) is the world’s leading producer of motor vehicles. The automotive industry is one of the most significant contributors to the economy of the European Union. The presence of vast base of the automotive industry in the European Union has contributed largely to the prosperity of Europe.

The automotive industry in European Union is the largest provider of employment to people in Europe. The industry employs the largest number highly skilled labors and is a key driver of the Europe’s innovation and knowledge.

The European automotive industry accounts for attracting largest foreign investment in R & D (Research and Development). The major highlight of the European Union automotive industry is that, the sector is one of the leading contributors to the GDP (Gross Domestic Product). The industry also accounts for the largest export of Europe; this is one sector where Europe exports more than it imports.


The European Commission realizes the potential of the automotive sector and it has been proactive to safeguard the industry and encourage it to prosper further. In this context, the commission has set forth certain objective regarding the automotive sector, which is as follows:

1. To encourage competition amongst key players in the industry:

The European Commission aims to identify and assess the policy issues that are significant to encourage healthy competitiveness of the EU automotive industry and to recommend feasible solution by taking into account the social, environmental and economic objectives.

2. To adapt a simple and comprehensive Internal market regulations for automotive industry:

The efforts of the European Commission to improve the internal market regulation for automobile industry in Europe is mainly within the purview of the introduction of the whole vehicle-type-approval system that allows automobile manufactures to have a vehicle type approved in one member country of the EU and then be able to sell/market the finished product in all other member countries of EU without any further tests.

3. To encourage foreign investment in the sector and promote globalization of the technical regulation through UNECE:

Global technical harmonization is a crucial factor for encouraging competitiveness of the automotive industry in the European Union and makes an impact on the global stage. The European commission has ambitious plans to give further boost to the automotive industry by encouraging more foreign investment in the sectors especially from Asian automobile giants. Recently, Asian automobile manufacturers like Honda and Toyota are exploring the European market.

Automotive Industry in different European Countries:

The automobile industry is widespread in different countries in European Union. In most countries the automobile industry is a big industry and contributes greatly to the country’s exports, GDP and the overall economy.

Germany: Germany has been a leading automobile producer in the world since long. In fact Germany is considered to be the birthplace of automobile. The automobile industry in Germany is one of the biggest industries in the country and is the largest employers. The industry provides employment to a huge labor force about 886,000 employees in the country. In addition, Germany is also a leader in producing passenger cars amongst all member countries in the European Union. The German automotive industry accounts for more than 29% of the total EU automobile market share.

Currently the German automotive industry is dominated by six major companies which includes VW (Volkswagen), Daimler AG, BMW, Opel, Audi and Opel. According to recent reports released by the German industrial analysts, Germany produces more than 6 million vehicles including passenger and commercial vehicles every year. Besides, German automobile companies accounts for manufacturing 5.5 million automobile units in overseas markets. Germany along with other leading global automobile producers such as Japan, China and United States is among the top four automobile manufacturers.

As per the GAAI (German Association of Automotive Industry) reports released in 2009, Germany was one of the leading nations in EU in terms of new car registration which was about 2.9 million new registrations. The GAAI has also forecast that these figures are likely to increase in the forthcoming years; it would reach about 3.1 million by 2012.

The financial crisis that hit the global economy during the later part of 2008 had an adverse effect on the German automobile industry; it affected both the manufacturing and supply chain. Several major automobile producers were forced to control their production levels and during the third quarter of 2008 the sales of the automobiles dropped. However, post the financial turmoil, the German market recovered well and the German government made efforts to put the sector back on development track.

France: The automotive industry is the biggest contributor to France’s foreign trade balance. France ranks as the fifth largest country in the European Union in the production of automobiles. On an average the French automotive industry has an annual output of about 3.5 million vehicles.

For the past 10 years France has been ranked among the top 10 countries in manufacturing automobile in European Union. The major players in the French automobile industries include Renault, Bugati, and PSA Peugeot Citroen.

The automobile industry in France provides employment to more than 300, 00 employees. Recently, major foreign players like Toyota and General Motors have increased their investments in France.

The federal government of France is mulling over the introduction of new policies for helping the automobile industry in the country. The government is not only aiming to help the local automobile companies like PSA Peugeot Citroen and Renault SA but also aims to help foreign companies to invest in the country.

The French government is contemplating to increase the amount of aid provided to car makers in France, so as to make these companies able to cope up with the credit rates which are high and scarce.


There are various government-sponsored agencies of the member states of the EU that assist investors by providing information about the investment prospects in the automation sector.

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