China and electric cars offer automakers hope after a dire 2020

Sales of luxury cars in China and electric drives in Europe were the two bright spots for European automakers in a 2020 blighted by the Covid-19 pandemic, company updates showed on Tuesday.

China's auto industry rebounded swiftly after its shutdown to tackle the Covid-19 outbreak, while in Europe manufacturers' battle to meet tough new emissions targets helped electric vehicles (EVs) move from the margins to the mainstream.

Volkswagen, the world's biggest car maker, reported a drop in sales at its core VW brand of more than 15% against 2019.

While VW brand sales fell nearly 10% in China, Volkswagen's luxury Audi brand had its best-ever fourth quarter and full-year sales in China rose 5.4%.

The VW brand also saw global sales of fully-electric cars jump 197% from 2019 to 134,000, though that still only represented 2.5% of the total.

“2020 was a turning point for Volkswagen and marked a breakthrough in electric mobility,” said Ralf Brandstatter, head of the VW brand.

Rival BMW saw sales rise 3.2% in the fourth quarter and ended 2020 down 8.4%. But the car maker, which also owns the Mini and Rolls-Royce brands, said sales were up 7.4% in China, its best performance since entering that market in 1994.

Meanwhile, Daimler's Mercedes-Benz brand, which reported figures on Friday, remained the world's top-selling luxury car maker for the fourth year running. While global sales fell 7.5%, the premium brand saw sales in China increase 11.7%, including a 22% jump in the fourth quarter.

Electric Avenue:

The race is now on to develop EVs to meet emissions targets and challenge market leader Tesla.

The major car makers need to produce large numbers of EVs to achieve economies of scale and make them profitable, and 2020 gave some hope they may be on course to achieve that.

EVs were the only good news in an otherwise bleak 2020 for France's Renault, which underperformed the global and European car markets.

While Renault's group sales fell more than 21%, its EV sales in Europe leapt more than 101%. The company confirmed it had met its 2020 EU emissions targets, thus avoiding fines.

Renault's CEO Luca de Meo will present a strategy update on January 14 that sources say will focus on reviving some older best-selling models as EVs.

BMW said global EV sales rose 31.8% versus 2019 and accounted for 15% of sales in Europe, “meaning electromobility is also a significant growth driver for the company in absolute terms”.

BMW also met its 2020 EU emissions targets.

The car maker said that by 2023 it would almost double its line-up of electrified vehicles to 25 models, with more than half of them fully electric.