The global automotive industry recorded sales of $2.56 trillion in 2023, accounting for 7% of EU GDP. Italy, after a sharp decline in production (-61.9% between 2000 and 2023) is now in weak recovery: 2023 records +15% vs 2022. The key to the sector’s growth: focus on electrics, components and the fight against counterfeiting.
This is what emerges from the Rome Business School report “The Future of Automotive. Production, sustainability and the fight against counterfeiting” edited by Francesco Baldi, Lecturer of Rome Business School’s International Master in Finance, Massimiliano Parco, Economist, Centro Europa Ricerche and Valerio Mancini, Director of Rome Business School’s Disclosure Research Center.
At the end of 2023, Italy was last in terms of car production among the four largest producers in Europe: 540 thousand cars, compared to 4.1 million in Germany, 1.9 million in Spain, and 1 million in France (ANFIA). Among the European powers, it was Italy and France that recorded the biggest reduction in car production between 2000 and 2023, -61.9% and -63.2%, respectively. Germany (-19.8 percent) and Spain (-19.4 percent) also experienced declines in the production sector, but to a lesser extent. Although Italy’s market share fell from 3.5 percent in 2000 to just under 0.8 percent at the end of 2023, it is now recovering weakly, registering +15 percent in 2023 vs. 2022.
“Profound has been the reduction in terms of production in the automotive sector. However, Italy has always enjoyed a highly skilled working class in automobile production and world-renowned designers. In fact, the reputation of Italian automakers is one of the industry’s strengths,” says Francesco Baldi.
In 2021, the 2,329 motor vehicle, trailer and semi-trailer manufacturing enterprises operating in Italy generated a turnover of 68.5 billion euros, +12.7 percent compared to the pandemic year 2020 and +4.8 percent compared to 2019.
85 percent of this turnover comes from large companies, despite the fact that in numerical terms they weigh only 4 percent of the industry (93 units out of 2,329). Not only that, even though together vehicle manufacturing companies in 2021 accounted for only 0.6 percent of the Italian manufacturing sector, they generated as much as 6.4 percent of the revenues of the entire Italian manufacturing sector.
Francesco Baldi points out that “The Italian automotive sector is characterized by the high fragmentation of firms: many micro-firms (up to 9 employees) that dominate numerically (increased by 28.7 percent in 2008-2021), but contribute modestly to revenue growth (only 1 percent of the total). In fact, much of the industry’s turnover (85 percent) is generated by large firms (with 250 or more employees), although they account for only 4 percent of the industry (93 out of 2,329).”
Analyzing the number of people employed, on the other hand, between 2019 and 2021 there was a reduction of 4,349 compared to 2020 and 333 compared to 2019, a total of 168,581 units.
Finally, studying over a broader time frame, 2008-2021, firms in the Italian automotive sector are found to have increased by 3.1 percent from 2,260 in 2008 to 2,329 in 2021, registering a +7.3 percent increase in turnover since 2008. Regarding wages in the sector, the salary per employee increased by 27%, rising from €26,629 to €33,816. The largest wage increase was observed in enterprises producing motor vehicles, trailers and semi-trailers with 10-19 employees (+33.5% between 2008 and 2021).
According to Maximilian Park, “The unit wage increase resulted from both a growing wage bill by automotive firms, which increased between 2008 and 2021 by 16.5 percent, and a decline in the number of employees, -8.3 percent.”
With regard to the fleet of cars circulating in Italy in 2022, it is reported that the province of Rome has the largest number of cars, with more than 2.7 million cars. This is followed by the province of Naples and Milan with just over 1.8 million cars. The province of Turin also records a high number of cars (1.4 million), while the provinces of Catania, Brescia and Florence hold more than 800,000 cars. In contrast, the provinces of Aosta, Trento and Bolzano are characterized by the highest number of cars per inhabitant. This is because of their low population concentration.
In recent years, the automotive industry has been undergoing major transformations generated mainly by increased environmental awareness, technological advances and an evolution in consumer preferences, which will lead to an increasing demand for electric cars. Per Boston Consulting Group (2023), while in 2020 about 80 percent of vehicles produced in Europe were exclusively powered by ICEs, this share will drop to less than 5 percent in 2030. By that year, the share of BEVs will be about 59%, 11% PHEVs (hybrids with external charging) and 25% hybrid vehicles (HEVs).
It should be considered that the labor effort required to produce BEVs is less than the effort required for ICE vehicles. However, BEVs require additional components, the most important of which is the battery. The production of batteries, modules and cells will be conducted largely in Europe, with the potential for a significant increase in employment. As a result, industry trends will lead to nearly flat employment development in the automotive industry until 2030.
For Francesco Baldi, “In Italy, the use of automation will tend to clash with the need for engineers in the electric car sector, thus determining – depending on which scenario prevails – a positive or negative impact in terms of employment.“
Italy has a strong tradition in the automotive components sector, with many specialized companies: there are more than 2,200 active companies headquartered in Italy, employing about 200,000 people and generating an annual turnover of more than 40 billion euros (ANFIA, 2023). After the recovery observed in 2021, with a largely positive change in revenues and a resilience in the number of employees, in 2022 the dynamics of revenue growth continued, albeit in more moderate terms (+9.0%), accompanied by substantial stability at the employment level (+0.5%).
Among the different components of the sector, those performing best are research and development (+17.4 percent), motorsport specialists (+14.5 percent), and subcontractors, particularly those in machining (+14.2 percent); much lower are the system and modulist segments (+3.9 percent). At the regional level, on the other hand, Piedmont is the area with the largest number of companies operating in the components sector (33.6 percent), followed by Lombardy (26.9 percent) and Emilia-Romagna (10.6 percent), which together cover more than 70 percent of the total. In the Northeast, Veneto (8.9 percent) stands out, in Central Italy Tuscany (3.1 percent), and finally in the South (including the islands) Campania (3.4 percent). Specifically, companies based in Piedmont account for about 34 percent of both turnover and employees in the sector.
Increasingly worrisome are the numbers of counterfeiting in the component field. In fact, the overall global economic impact of counterfeiting and piracy in the automotive industry has reached a record $2.3 trillion by 2022.
“The impact of these challenges is not only economic, but also affects security, brand integrity and the overall stability of this industry,” says Valerio Mancini.
In Italy, the Agency of Excise, Customs and Monopolies, in its work to combat illicit activity, seized in 2021 – a total of motor vehicles, mopeds and their accessory parts – more than 36 thousand counterfeit pieces, an increase over the previous year of about 300 percent (ADM, 2022).
Looking ahead, “The Italian automotive industry is in a crucial phase of transformation, in which sustainability, technological innovation, production flexibility, research and development, and the fight against counterfeiting play a central role. Future prospects offer significant opportunities to strengthen Italy’s leadership in the sector, geared toward sustainability and maintaining the quality standards that distinguish the Italian automotive industry globally,” says Valerio Mancini.
The conversion to the production of electric and hybrid cars and the challenge for the production of hydrogen cars will represent further opportunities for the future of an extremely important sector for the Bel Pease industry.
Indeed, ever greater attention will have to be paid to the environment. The road transport sector is, in fact, one of the few in the 21st century that has marked an increase in emissions, along with the residential and waste disposal sectors.
For Massimiliano Parco,“It is certainly in these three sectors that attention will have to be focused in order to reach theachievement by 2030 of a 55 percent reduction in climate-altering emissions and by 2050 of “net zero” emissions (carbon neutrality) in line with the European green deal.”