Europe's auto industry is likely to contract this year, industry association ACEA said, fueling concerns that automakers' best years are behind them for now.
Forecasting the first downturn in EU car sales in seven years, the Brussels-based lobby group said it expects registrations to drop 2 percent in 2020.
Sales ended 2019 1.2 percent higher after a year-end buying spree in December.
"One of the biggest drivers of change for our sector is the need to address environmental concerns," ACEA President Michael Manley said in a statement. "The good news is that carbon-neutral road transport is possible," he said. A lot needs to change in the next few decades, he said.
Manley said Europe's regulators should ensure that their policies strengthen the industry's global competitiveness and also keep road transport and mobility affordable for everybody.
"At the very time when our industry is massively stepping up investments in zero-emission vehicles, the market is set to contract – not only in the EU but also globally – so the transition to carbon neutrality needs to be very well managed by policy makers," he said.
Automakers in Europe are dealing with pressures on several fronts, with trade tensions between the U.S. and China, as well as regulations taking effect this and next year aimed at lowering carbon emissions
A bright spot for automakers is the rise of electric cars.
Electric-vehicle sales are expected to grow 32 percent this year, according to BloombergNEF. Those will be vital for the continued success of car companies, as the European Union has limited the amount of carbon dioxide car fleets can emit on average to 95 grams per car per kilometer, or face steep fines.
Manley, who is also CEO of Fiat Chrysler Automobiles, became ACEA head in December.
Europe is not the only region facing a tough 2020 for car sales. China, the world's largest autos market, saw its second annual fall last year, with drops in 18 of the past 19 months.
Automotive News Europe contributed to this report