EU Car Production to Decline by 2.6% in 2025, Pressuring Steel Demand

EU Car Production Decline Signals Trouble for Steel Demand

The European automotive sector faces a deeper downturn in 2025, dragging steel demand with it. According to EUROFER, car production across the EU is forecast to drop 2.6% year-over-year. This marks the second straight annual contraction, following a steep 9.7% fall in 2024.

Despite a temporary rebound in 2023, structural weaknesses have resurfaced. High inflation, fragile consumer confidence, and uncertainty around electric vehicle (EV) policies are hitting automakers hard. The industry accounts for nearly 20% of European steel consumption, amplifying the impact of each production dip on the steel sector.

In addition, trade pressures continue to mount. New US tariffs on European vehicle imports and aggressive competition from Chinese EV makers are eroding EU automakers’ global position.

Steel Demand Drops in Tandem with Automotive Slowdown

EUROFER projects a continued fall in both real and apparent steel consumption in 2025. Specifically, the association expects a 3.3% year-over-year drop in real consumption and a 0.9% decline in apparent use. This would mark the fourth consecutive year of reduced steel demand across the EU.

While 2023–2024 showed a short-lived recovery in new car registrations, the momentum faded quickly. In Q1 2025, car sales dropped 1.9% year-over-year. Gasoline vehicle sales alone plummeted over 20%, highlighting the severity of the sector’s transition pains.

Meanwhile, European investment in EV infrastructure lags behind expectations. Automakers struggle with regulatory ambiguity and limited charging infrastructure, making it harder to compete with better-prepared international rivals.

SuperMetalPrice Commentary:

The decline in EU car production is more than a cyclical dip—it’s a signal of deeper structural issues. Steelmakers now face lower demand from a sector that once served as a reliable growth engine. Unless macroeconomic stability returns and industrial policy becomes more coherent, both industries risk long-term stagnation. The global shift toward EVs offers opportunity, but Europe must catch up in both capacity and clarity to reclaim momentum.