European car sales growth nearly stagnated in 2024, with continued bleak demand for electric vehicles.

Last year, European car sales barely grew, as continuous inflation, higher borrowing costs, and a tepid demand for electric models led consumers to delay purchasing cars. The European Automobile Manufacturers Association (ACEA) said on Tuesday that after a rebound in December last year, new car registrations in the region grew by a modest 0.9% year-on-year to 13 million units. After subsidies were withdrawn in countries including Germany, sales of pure electric cars fell by 1.3%, with market share declining to 15%. Despite the declining demand, stricter emissions targets by the EU will force European car manufacturers to sell more electric cars, meaning that these manufacturers will face another tough year ahead. Additionally, facing the impact of declining sales in the world's largest car market, China, and the threat of additional tariffs imposed by the Trump administration in the US. UBS analyst Patrick Hummel wrote in a report earlier this month that price pressures, market share losses in China, stricter emissions regulations, tariff risks, and sustained weak demand have created a "perfect storm" for European manufacturers this year. Bloomberg Intelligence analysts predict that new car sales in Europe may decline in the first half of 2025. However, they forecast that discounts in the second half of this year may slightly boost demand. Although the sales of pure electric cars have been struggling, consumers are increasingly opting for hybrid models due to ongoing range anxiety. Sales of plug-in hybrid cars in Europe declined last year but rebounded in December. In both the US and Europe, consumers prefer plug-in hybrids over pure electric cars, making the electric vehicle strategy for car manufacturers more complex and leading some manufacturers to add more hybrid models. In December last year, demand for pure electric cars in the EU was particularly weak, with registrations dropping by 10% excluding countries like the UK. This contrasts sharply with the 5.1% increase in total car sales in the EU last month, which would have been a 4.1% growth if all European countries were included. The ACEA, led by CEO Ola Kllenius of Mercedes-Benz Group, is calling on the EU to revise its regulations on carbon dioxide emissions, under which car manufacturers must increase their sales share of electric vehicles or face hefty fines. Kllenius urges EU leaders to reach a "grand compromise" with the Trump administration instead of imposing retaliatory tariffs on imports. In Germany, the cancellation of national subsidies for electric cars led to a sharp decline in electric car sales last year, prompting local car manufacturers to call for more support for the industry before the early election scheduled for February. Conservative candidate Merz, who is expected to run for German chancellor, hopes to continue selling new internal combustion engine cars after the EU implements a ban in 2035, while current chancellor Scholz calls for incentives for electric car taxation.