European auto components manufacturers and suppliers operate in a softer market that is shaped by several cross currents. Sharp competition from China weighs on pricing, while limited scale keeps European players from matching the price leverage seen in larger markets. The shift to electric propulsion remains uneven, creating transitional costs and supplier realignments. Policy shifts lie on the horizon too, including the potential for tariffs on light vehicle imports if political leadership changes, alongside the European Union’s emissions rules that continue to press for lower tailpipe output and cleaner production. For readers in North America, these dynamics echo similar pressures in the global supply chain, underscoring the importance of resilience in supplier networks.
Against this backdrop, the top twenty European banks hold a collective gross exposure to the auto sector of about 57 billion euros, roughly 1.2% of total loans to non-financial corporations, rising to about 89 billion when including rubber products manufacturing, and around 1.9% if the rubber segment is counted. Four institutions — Commerzbank, CaixaBank, Erste Group Bank, and UniCredit — stand out with a combined gross exposure well above peers, exceeding 3% of their total lending to non-financial corporations. S&P Global Ratings notes that profits are positioned to absorb the expected additional credit costs from this sector, given the current earnings trajectories and risk buffers.
Other major lenders, including Société Générale, BNP Paribas, and Banco Santander, operate sizable auto leasing businesses. The assessment explains that a decline in new car sales generally reduces leasing volumes, though it does not automatically drive higher delinquencies, as outcomes hinge on the wider macroeconomic picture. Banks also incorporate stress tests on used car residual values to gauge potential losses and to set capital buffers accordingly.
On that basis, economists at S&P Global Ratings anticipate that European banks will keep delivering solid operating results in the near term, even with the auto sector under pressure. The forecast calls for a modest uptick in credit costs, driven by higher delinquencies and restructurings in targeted portfolios such as commercial real estate and small and medium sized enterprises.
Looking ahead, lending to car suppliers could generate additional credit costs for banks in 2025 as supplier credit quality comes under increased pressure compared with equipment manufacturers in the same sector.
The auto industry, spanning vehicle production and retail, contributed roughly 2% to 6% of gross value added in the major EU economies, with Germany near the upper end. In Slovakia and the Czech Republic, the share is even higher. The sector employs about 2% to 5% of the working-age population in most EU nations, with Germany showing a notable concentration.
In markets where the sector makes a meaningful contribution to GDP or jobs, the stress could erode asset quality for banks. Economists at S&P Global Ratings warn that the impact goes beyond direct lending. Tensions in the auto sector could trigger wider economic spillovers, including job losses and reduced investment, affecting the broader credit cycle.