The Europe Car Market Is in the Grip of the Osborne Effect

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The European car market and the Osborne effect was the topic of an article I wrote nearly 7 years ago. I made bold predictions for the future, and as all predictions of the future, they were wrong. I should have written a followup on it, but I did not predict the COVID pandemic in 2020 or the invasion of Ukraine in 2022. Both did have large repercussions for the European car market. The statistics for 2020 up to most of 2023 were influenced so much by these two disasters that an interpretation of the influence of the invisible hand on the market was impossible. The predominant influence was the force majeure of these disasters.

But all things pass and the market has recovered from disruptions. Now I have the statistics for 2019 as well as H2 2023 and later to look at. Not that these numbers are perfect — the irresponsible German cut in incentives in late 2023 was clearly felt in the EU+ statistics, an outlier normally removed from a statistics analyses. Combining these with countless comments from people interested in the car market, like executives, editors of automotive magazines, fellow journalists, and the numerous people leaving their thoughts in the comments section of posts on social media, the conclusion is very clear. The market is in the grip of the Osborne effect.

I used statistics published by ACEA to make this table below. The 2025 numbers are projections based on the first 10 months.

When looking at this table, 2024 was a special year. There was the 144,000 drop in BEV sales in Germany following the end of purchase subsidies in late 2013. There was also delayed demand because of the many new models of model year 2025 that the carmakers needed in order to comply with the new CAFE thresholds for CO2 gr/km. It’s normal in the car industry for a model to have fewer sales just before an upgrade. It is not normal that a complete class of vehicles has an upgrade at the same moment. Without the German issue, the 2019–2024 growth of BEVs would likely have been around 490% compared to 2019. The overall sales would also have been slightly better. But the growth of BEVs cannot completely compensate the shrinking demand for ICE.

A refresher on what the Osborne effect is: Over 40 years ago the British Osborne home computer was a huge sales success. When its successor was announced about a year before it came to market, sales of the current model plummeted to close to zero because the customers delayed purchase until the new model was available. It caused the bankruptcy of the company. It is a lesson every marketing manager has learned. Sometimes it is used to block sales of a competitor by promising a far better product in the future.

Now we have the situation that the public knows that BEVs are better driving machines than ICEVs. They also know that China is making BEVs that are much cheaper than the products on the European market. Sloppy journalists compare the Chines pre-tax prices for models without the many safety features mandatory in Europe to the all-in drive-away prices in Europe. And last but not least, newer BEV models are more capable for the use cases Europeans expect from their cars. This situation screams: “Osborne Effect – Danger!”

The decline in ICEV sales indicates that the public is realizing that its time is over. Because the public is buying BEVs in smaller volumes for now while it is not buying as many ICEVs, we see a big decline in the total sales of cars. This is likely due to lack of choice for BEVs that can be used in the use cases required. It can also be that they are still too expensive and the public is waiting for lower prices. To get back to the normal 15 million passenger vehicle sales a year, the industry must offer more economical and more capable cars.

An infomercial campaign explaining what the latest generation BEVs can do and how safe they are, how many years/miles they can be used, how the latest batteries have a long service life ahead of them, and how easy it is to find a charger will also help. Knowing that the ICEV era is over is not the same as knowing what the new normal is. Too many still believe that very soooon the promised hydrogen cars will become the new standard bearer. It is up to the marketing departments to put this fairytale to rest. Keeping selling ICEVs for another 10 years while working on HFCEVs is not a realistic option.

Probably the biggest problem for the European car industry is that the (marketing) management does not realize that the market is in the grip of the Osborne effect. Because they all know exactly what to do and how to beat the competition when they encounter (or create) an Osborne effect. It is marketing 101.