The automotive sector, battered by the pandemic's onslaught in 2020, embarked on a journey of recovery in early 2021, but the path ahead has been fraught with challenges. The first quarter of 2023 marked a fourth consecutive increase in output (+15.7%), primarily due to the low base effect from a year earlier. However, the road to complete restoration remains rocky, as supply chain disruptions and consumer uncertainties continue to cast a shadow over the sector's progress, reveals EUROFER’s latest reportThe automotive industry, once flourishing, now grapples with the aftermath of trade tensions, emissions rules, and shifting consumer preferences. Since the third quarter of 2018, sluggish domestic and export demand, trade uncertainties, and fluctuations in ownership and model ranges have taken their toll. Moreover, the pandemic's supply chain disruptions, shortage of components and semiconductors, and surging energy prices further strained the industry's growth prospects.Despite the hurdles, consumer resilience and an uptick in demand over the last three quarters have provided a glimmer of hope for the sector's revival. However, ongoing disruptions on the supply side, particularly the semiconductor shortage and soaring energy prices, continue to impede progress. Consumer confidence remains fragile due to high inflation and economic uncertainty, but there are signs of improvement, with passenger car sales recording an 18.5% year-on-year growth in May 2023.The market share of electric vehicles is on the rise, but uncertainties surrounding EV implementation and the lack of infrastructure have hampered consumer demand. Nevertheless, the political commitment at the EU level towards full EV adoption by 2035 offers some support, even as consumer confidence remains a crucial determinant of car demand in 2023 and beyond.As we look ahead, the automotive industry's forecast is cautious. After a modest rebound in 2021 and 2022, demand is expected to remain weak, contingent on significant improvements in the macroeconomic climate and consumer disposable income. The implementation of EVs and investment decisions by carmakers will play pivotal roles in shaping the industry's trajectory.Full recovery in global trade and demand from major markets like the United States and China will be vital for EU car exporters. However, concerns linger over the potential market share held by Chinese EV producers. Although output is projected to rebound more robustly in 2023, the sector will face another setback in 2024, with output levels expected to dip by 4%.The automotive industry's odyssey continues, navigating a complex landscape of challenges and opportunities. While the road to full recovery may be uncertain, strategic policies and consumer confidence will be the compass guiding the sector towards a brighter future.