The complex relationship between politics, the energy sector, and the global automotive and transportation industries is difficult for the average person to follow. While most citizens and their leaders agree that an eventual move away from dependence on finite fossil fuel resources is necessary to sustain modern civilization as we’ve come to know it, politics and bureaucracy can significantly influence (or hinder) progress. This was especially true in 2019 when political policies shook the automotive industry and prompted bold new initiatives to reshape the future of transportation around the globe.
How are New Policies & Trade Agreements Impacting Auto Manufacturers?
Impactful political movements like Brexit and America’s renegotiation of international trade agreements led to some consumer uncertainty in 2019. Likewise, movements including the push for a “Green New Deal” in the US and European policies to lower carbon emissions are influencing current and future trends in all areas of energy, transportation, and the auto industry.
Globally, new auto sales dropped by about 4% in 2019, bringing in a revenue of $2.2 trillion on the passenger car market, which is the greatest decline in sales since the financial crisis of 2008.
source: 2019 in the Automotive industry
Softening of the Chinese auto market was a significant factor in this slump. As the world’s largest market for automobiles, China saw about an 11% drop in new car sales in part due to new emissions standards as well as a rise in used car sales. The slowing in China’s economic growth due to the so-called US-China Trade War is also considered a critical factor in the decrease in new car sales in the country.
In comparison, the U.S. 2019 auto sales figures were not nearly as bleak. Over 17 million vehicles were sold in America in 2019, only a 1.6% decline from the previous year. The US-China trade deal negotiations were not as impactful as many experts had predicted. Some economists made note that those American counties hit hardest by the Chinese tariffs targeting agricultural goods showed the biggest decline in new vehicle sales, so tariff repercussions were, indeed, felt in parts of the country.
source: 2019 in the Automotive industry
The European new car market saw a welcomed increase in sales of 1.2% in 2019. New car sales were off to a slow start at the beginning of the year but skyrocketed at year’s end when car registrations jumped by 21%.
Emissions-based tax incentives taking effect in 2020 as implemented by some European countries, such as France and Sweden, are believed to be the catalyst for this boom in European auto sales.
Green New Auto Deals
Sustainability is the buzzword of the automotive industry, with essentially every major automaker jumping on board the green train. In part, this is being forced upon the industry by pressures from progressive “social justice” movements, i.e. AOC and Greta Thunberg, as well as governments that are writing new laws and policies to help fight pollution and climate change.
The message is hitting home with prospective car buyers, according to a recent study by Deloitte. The report stated that there is significant growth in the number of people who would like their next vehicle to be either a hybrid or electric. Predictably, interest in electric vehicle ownership grew with the proposition of increased gas prices.
Automakers who lead the way in adapting to a green automotive future are sure to be rewarded for their efforts. The American Council for an Energy Efficient Economy (ACEEE) awarded the Hyundai Ioniq Electric vehicle with their highest “Green Score”, with 67 out of 100 points based on the environmental damage index. This index, or EDX, rates the overall impact that resulting pollution from a particular vehicle has on human health. The ACEEE Green Score doesn’t rate a vehicle only on emissions. It measures the comprehensive cradle-to-the-grave impact from auto manufacturing pollutants through eventual recyclability at end of life of the car.
Carmaker Nissan, makers of the popular Nissan LEAF electric vehicle, is taking the green commitment even further by incorporating solar, wind, water, and biogas energy to power their manufacturing plants, helping to reduce CO2 emissions. The company expanded its green initiatives beyond the factory walls by providing a school in South Africa with a sustainable energy system comprised of recycled Nissan LEAF batteries. The program is an effort to work in concert with the United Nations’ Sustainable Development Goals. The Filadelfia School now enjoys a reliable source of electricity through the use of renewable energy, thanks to Nissan Motor Corporation.
With an estimated 1.4 billion passenger cars on the road throughout the world, the push toward sustainability in the automotive sector is perhaps a little overdue, but certainly, it is a case of better late than never.
Author: Giles Kirkland, automotive expert and consultant