A JATO Dynamics has just published a new study that looks at why American cars are struggling to catch on in Europe. According to the survey, a new wave of protectionism by the United States could have a profound impact on the entire global automotive industry, in an attempt to rebalance a historically unbalanced trade relationship with the European Union.
The article, titled "Understanding the US-Europe Trade Imbalance", investigates the underlying causes of this gap in automotive trade flows between the two markets. It's not just about tariffs: while until April American vehicles imported into Europe were subject to a 10% tax, Europe paid just 2.5% to export its models to the USA.
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Source: Mario Villaescusa / Motor1.com
In 2024, the United States sold 16.09 million new light vehicles. Of this total, 61% were produced locally and 39% came from imports, a greater share of imported vehicles than in any other developed market.
To compare: in the European Union, imports account for just 26% of new vehicle registrations; in South Korea, by 20%; and in Japan, the share is even smaller, with only 7.8% of new vehicles sold being of foreign origin.
This data makes clear the strong dependence of the North American market on imports, something unusual among large global markets.
Motor1 Numbers: SUVs grandes na Europa
Photo from: Motor1.com
In addition to dependence on imports, another factor that increases the trade imbalance is the difficulty of US automakers in offering models with true international appeal – with the exception of Tesla. In 2024, sales of EU-made vehicles in the US topped 821,000 units, while registrations of US-made cars in Europe were just 188,100 units, a deficit of more than four to one.
This difference exposes not only the preference of European consumers for locally produced models, but also the difficulties faced by automakers in adapting their products to the tastes and needs of the European public.
Fonte: Cadillac
The main reason for this gap, according to the research, is the preferences of the American consumer, traditionally more focused on larger vehicles. Over the past few decades, U.S. automakers have shaped their production lines to meet domestic demand for SUVs and pickup trucks, which has ultimately limited competitiveness outside the local market.
Meanwhile, consumers in Europe and other markets, such as Japan and South Korea, tend to prefer more compact, efficient cars with a focus on technology and fuel consumption, respecting stricter environmental regulations.
In essence, although American manufacturers have perfectly met domestic demand, they have failed to develop models that have the same appeal in global markets, where preferences and regulations are very different.
Photo from: Motor1.com
Although SUVs are popular in both the US and Europe (with a market share of 57% and 52%, respectively), the taste for large SUVs – over five meters in length – is much stronger in the US, where they represent 21% of all SUVs sold, compared to just 2.4% in Europe. The difference is even greater in the pickup truck segment: in 2024, 2.95 million pickup trucks were sold in the USA, while in the European Union the number did not exceed 156,300 units.
This preference for large vehicles reinforces the specialization of American automakers in pickup trucks and large SUVs, which proves to be a double-edged sword: although they are profitable in the domestic market, they have little appeal in markets where urban space, energy efficiency and environmental regulations weigh more heavily in the purchasing decision.
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Source: Mario Villaescusa / Motor1.com
This lack of global appeal has led automakers such as General Motors and Ford to reduce operations outside the US, increasing dependence on the domestic market and further fueling the trade imbalance. In contrast, European manufacturers have diversified their portfolios, adapting their models to suit different preferences around the world.
While Americans specialized in serving a very profitable domestic niche, Europeans balanced production for local and international markets, managing to better compete globally.
Photo from: Motor1.com
The author of the article, Felipe Munoz, is an automotive industry specialist at JATO Dynamics.
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