European auto industry calls on Europe to rebalance CO2 policy in the interest of jobs and growth

Paris, 12 June 2015 – The European Automobile Manufacturers’ Association’s (ACEA) President, Carlos Ghosn, today underlined the importance of balancing the EU’s CO2 emissions reductions agenda and the auto sector’s global competitiveness.

In a speech today at ACEA’s Annual General Meeting Mr Ghosn, who is also CEO of Renault, said “As Paris and the world gear up for the COP21 global climate change conference, we must make sure that ambitious climate change policies do not conflict with the need to protect jobs and growth in Europe.”

The ACEA President’s call to EU policy makers coincides with the launch of a study by FTI Consulting on the potential effects of decarbonisation on the competitiveness of the European automobile industry.

Mr Ghosn stated, “No other industry sector has done as much as automotive to drive down CO2 emissions in recent years. EU political leaders should ensure equivalent conditions and targets for all industrial sectors in the future, taking actions where the greatest effects can be achieved at the lowest costs.”

By 2020 average emissions of new passenger cars will need to be reduced by 39% compared to their 2005 level. This compares to 10% reduction expected from other non-ETS sectors and 21% reduction expected from ETS sectors during the same timeframe.

Presently, CO2 reduction from road transport relies entirely on progress made in controlling emissions from new vehicles, even though new registrations make up just 5% of the fleet every year. The FTI study found that this system manages to be both expensive and ineffective because it does not address the bulk of the vehicles already on the roads. As it is, meeting the 95g CO2 target will cost manufacturers an estimated €1,000-2,000 per car by 2020.

While being ambitious is positive, Mr Ghosn explained, overly-ambitious targets for Europe risk creating competitive disadvantages for the EU’s industry in the global marketplace, but without commensurate benefits.

“We believe that a balanced and comprehensive approach should make it possible to develop a policy framework that will allow us to drive down total road transport emissions further and faster,” argued Mr Ghosn. Welcoming the European Commission’s stakeholder dialogue on decarbonisation to be held on 18 June, he said: “At the same time, we need to work with policy makers to protect jobs and growth. We will work constructively with EU policy makers to make this a reality.”

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Notes for editors

Key findings from the FTI Study

As a result of regulating emissions of new vehicles only, the automotive sector faces higher reduction targets than any other sector

  • Narrow focus on regulating emissions from new vehicles ( which only represent 5% of the EU’s entire vehicle fleet of approximately 250 million units)
  • Important factors influencing emissions from transport like fleet renewal or use are currently not taken into account.
  • Economic growth increases demand for transport and has an automatic knock-on effect on sectoral emissions.

Automotive is making bigger contributions to reduce CO2 than any other sector

  • Average emissions of new cars declined by 22% between 2005 and 2013.
  • By 2020 average emissions of new passenger cars will need to be reduced by 39% compared to their 2005 level. This compares to 10% reduction expected from other non-ETS sectors and 21% reduction expected from ETS sectors during the same timeframe.

Automotive is already subject to many costly regulations

  • The automotive sector is one of the most regulated industries in the EU. Regulations relating to safety, the environment, type approval of vehicles and taxation have already added significantly to the industry’s costs.
  • McKinsey estimates that between 1998-2011 regulatory content and other improvements such as ESP, airbags, fuel efficiency improvement and weight reduction increased production costs by 3-4% per annum. More recent environmental regulations are expected to add a further 6% to the average manufacturing costs by 2015 and 16% by 2020.

CO2 reduction investments are becoming more costly and less cost-effective

  • The 2020 target is estimated to impose an additional €1,000-2,000 manufacturing cost per passenger car on the industry. Even calculating with the lower end of this range, these estimates translate into a fleet-wide capital cost of €13 billion.

Regulation cost affects profitability of the automotive industry

  • Cost increases have not been reflected in increased prices. Car prices have, over the same period, increased only in line with inflation. The industry has not been able to pass the increasing costs onto its customers, and profitability has suffered as a result.
  • The change in the industry’s profits on their EU sales shows the position. From being the most profitable region in 2007, generating €15 billion profits, the European region is now the least profitable, with aggregated losses of €1 billion in 2012.

About ACEA

ACEA’s members are BMW Group, DAF Trucks, Daimler, Fiat Chrysler Automobiles, Ford of Europe, Hyundai Motor Europe, IVECO, Jaguar Land Rover, Opel Group, PSA Peugeot Citroën, Renault Group, Toyota Motor Europe, Volkswagen Group, Volvo Cars, Volvo Group. More information can be found on www.acea.be or @ACEA_eu .

Facts about the EU automobile industry

  • Some 12.1 million people - or 5.6% of the EU employed population - work in the sector.
  • The 3.1 million jobs in automotive manufacturing represent 10.4% of EU's manufacturing employment.
  • Motor vehicles account for €396 billion in tax contribution in the EU15.
  • The sector is also a key driver of knowledge and innovation, representing Europe's largest private contributor to R&D, with €41.5 billion invested annually.
  • The automotive sector contributes significantly to the EU trade balance with a €95.1 billion surplus.

Contact

For more information, please contact Cara McLaughlin, Communications Director, cm@acea.be, +32 2 738 73 45 or +32 485 88 66 47