European Makers Squeal Over Tough CO2 Targets Just Announced

A specter is haunting Europe, the specter of regulations…

After the establishment today in Brussels by the European Commission of new regulations to limit CO2 emissions to a fleet-average target of 95g CO2/km for cars and 147g CO2/km for vans by 2020, the European Automobile Manufacturers’ Association said they were tough targets for an auto industry in difficult economic times and “extremely challenging.”

In 2012 EU new car registrations are expected to decrease by about 7% compared to 2011, and sales are set to drop from 13.1 million to 12.2 million. This is a record low since 1995, and the fifth straight year of sales declines in the troubled Eurozone.

In a classic bureaucratic release that belies what is going on behind the scenes, ACEA said it would now work with its members to conduct a full analysis of how the proposed targets should be reached, as well as their feasibility, and what this means in practice for the industry as a whole. Translation: automakers are going to fight this as fiercely as they did in the past when an industry proposed voluntary reduction of CO2 emissions at the turn of the century never happened, except in press releases.

In 2011, the average EU fleet emissions were 136.6g CO2/km compared to 186g CO2/km in 1995, which is a 26.6% decrease over the period.

“It is clear that CO2 levels from vehicles have to continue on their downward trend and the industry is committed to deliver on this,” claimed Ivan Hodac, ACEA Secretary General.

It is not clear if the European auto industry has the political influence to modify the regulations in the face of strong and apparently growing (at least among EU regulators and some political parties) green sentiment in Europe.

More than 12 million European families depend on automobile employment, with 2.3 million direct jobs and another 10 million in related sectors. Roughly speaking, the car industry represents 6% of total European employment. Cars also represent a major source of income for the EU member states. Vehicle taxes contribute €360 billion yearly to government revenues.

“These are tough targets – the toughest in the world,” Hodac claimed.  He said this would increase manufacturing costs in Europe, creating a competitive disadvantage for the region and further slowing the renewal of the fleet.

“Considering that most manufacturers are losing money in Europe at the moment, the industry needs as competitive a framework as possible. Targets – while ambitious – must be feasible,” said Hodac.

EU economic problems are deepening as voters are turning out existing governments and demanding economic stimulus packages from new or barely surviving ruling elites. Expanding debt ridden national economies has thus far been resisted mostly by the German government, which has a relatively stronger economy with manageable debt keeping it in power for the moment. The EU commission in Brussels is insisting that debt be kept as a small percentage of actual GDP, creating a viscous cycle where spending cuts contracts the economy, creating the need for greater spending cuts, which shrinks the economy.

See also:

• Automakers Protest EU Korean FTA Deal is One Sided
• Consideration of European Cars Up in China. Japanese Down
• BMW Group and Toyota Motor Expand Collaboration
• Toyota France to Export Yaris to North America in 2013
• EU Car Sales Down 8.7% in May. Eight Straight Months of Drops
• Opel Woes Continue as EU Auto Sales Decline In April. Latest Turnaround Plan Faces Fierce Union Fight over Plant Closings
• Renault Group Q1 Sales, Revenues Drop from Eurozone Crisis