Industry needs more brand consolidation, Jefferies analyst Houchois says

Despite the seismic changes occurring in the industry and the ever-more stringent restrictions on emissions facing both automakers and consumers, Houchois said the demand for new vehicles is still strong and likely not far from pre-pandemic demand seen in 2018 and 2019.

European growth will be curtailed in the move to electrification as automakers remove minicars and small vehicles from their lineups, Houchois said. These vehicles have already been badly hit by tightening emissions and safety rules.

It is difficult to imagine a European car market reaching annual sales of 15 to 16 million units with no combustion-engine cars, Houchois said, especially when 2 million sales of smaller cars disappear.

On the other hand, the analyst said it is not inconceivable that the minicar and small car segments could become a stable part of the move to EVs, if consumers are willing to accept smaller battery packs that make them more affordable.

And, if this happens, it is not inevitable that cost will determine that these cars are largely China built, he added.

If Dacia can make the China-built Spring battery-electric small crossover a success in Europe thanks to its low-cost, maybe others, including Stellantis, can achieve this, Houchois said.