Axel Hoefer

Supply and Demand Issues in the Auto Industry

Axel Hoefer, Liz

The global automotive industry is grappling with severe overcapacity and zero demand visibility following a production contraction from 95 million to 89 million units, forcing manufacturers to prioritize liquidity preservation before resuming M&A activity. While China leads the operational recovery, European markets face an uncertain outlook dependent on government subsidies to stimulate demand, prompting regulators to maintain strict CO2 targets rather than roll them back. Long-term structural shifts include a multi-year capacity shakeout and a strategic pivot toward electrification driven by policy incentives rather than organic consumer preference.