Post-corona recovery plan taking shape as auto industry makes concrete recommendations to Commission

At EU level, the first tangible proposals to help Europe’s auto industry overcome the massive fallout of the COVID-19 pandemic, while facing the monumental challenge of making the transition to carbon-neutral mobility, were presented yesterday. The fact is that we are far from a done deal, as many hurdles still need to be overcome. Over the past few weeks our industry has made clear what exactly is needed for a successful restart of Europe’s auto sector.

Message from ACEA's Director General – May 2020

You might already have read that the European Commission presented an ambitious plan yesterday, which seeks to help the European economy to recover from the impact of the coronavirus. I was happy to see that the Commission recognises the massive challenges faced by automobile manufacturers across Europe and rightly acknowledges that the auto sector is one of the hardest hit by the coronavirus crisis.

However, it is disappointing to see that the proposed Recovery Package remains quite brief and vague on the instruments and financial means for the recovery of the European auto industry. As a sector representing the jobs of 13.8 million Europeans, we eagerly await clarity on when and how exactly some of the announced measures – such as fleet renewal schemes to make clean vehicles more affordable, the deployment of alternative fuels infrastructure and fast-tracking of the European Battery Alliance – will be implemented in practice.

Indeed, these discussions are far from over. That is exactly why I would like to provide a recap of all the concrete and immediate proposals that ACEA has made over the past few weeks.

This month’s major milestone was the constructive discussion we had with Frans Timmermans, the Commission’s Executive Vice-President for the Green Deal, and Thierry Breton, Commissioner for Internal Market. We agreed with both Commissioners to jointly work on a strong and green re-launch of the automotive industry, with the aim of stimulating the wider European economy and bolstering the transformation to a carbon-neutral society in parallel.

At that occasion, I stressed that the number one priority of our industry is to revive the market, thereby enabling production to resume at normal levels again at manufacturing sites across the EU. Given the near-total collapse in vehicle sales since the coronavirus took hold of Europe, it will be crucial to provide strong market stimuli to enable vehicle makers to fully re-open production facilities and keep people in jobs.

The 15 CEOs and board members that participated in the conference call with Timmermans and Breton on behalf of ACEA re-iterated their plea for a coordinated re-start of activities and investments along the entire value chain. They explained that, although vehicle and component production is slowly starting to pick up again, there are still huge discrepancies among member states. This is greatly hampering the recovery of an industry that strongly depends on complex supply chains spanning right across the entire European continent.

Indeed, freshly-updated data that ACEA released earlier this month clearly demonstrates the sheer scale of our industry’s manufacturing footprint. This is a timely reminder, as some people tend to forget that 298 automobile assembly and engine production plants operate in Europe, 196 of which are situated within the European Union. Our new interactive map shows that 142 of those plants produce passenger cars, 38 make light commercial vehicles, 58 build heavy-duty vehicles, 58 produce buses, and 71 make engines in Europe.

Since mid-March, however, production at these factories has been severely impacted by the COVID-19 crisis, with plants being closed for 30 working days on average to date. EU-wide production losses because of these factory shutdowns total at least 2,435,824 vehicles so far. And although many of these factories have re-started production to some extent by now, they are all still operating well below pre-lockdown capacity.

The fact that a factory is open again does not mean that output is back at ‘healthy’ levels so to speak, nor that all employees are back at work – on the contrary. Last month alone, registrations of new passenger cars in the European Union posted a year-on-year decline of 76.3%. The fact that most of Europe was under lockdown for the entire month, resulted in the strongest drop in car demand since records began.

In two of the largest EU markets, Italy and Spain, car sales were down by as much as 97%. With most showrooms across the EU closed the whole month of April, the number of new cars sold fell from 1,143,046 units in April 2019 to just 270,682 units last month. And we saw a similar impact on registrations of commercial vehicles in April, which declined by 67.0% compared to last year.

These numbers would have been impossible to imagine just a few months ago. It also means that the whole sector is at risk of liquidity shortages and sees its performance threatened for some time to come. And maybe needless to say, the current crisis in the automotive industry has a significant knock-on effect on other parts of the economy.

If we are to return to full-scale production again, measures will also need to be taken to stimulate demand, given that sales have crashed to an all-time low in many key markets.

That is also why we joined forces with CECRA, CLEPA and ETRMA recently to call for vehicle renewal incentives. Together representing the full automotive supply chain, the four associations proposed a plan comprising of 25 key actions to successfully exit from the corona crisis. Targeting decision makers at EU and national level, the action plan calls for coordinated vehicle renewal schemes for all vehicle types and categories across the EU.

We are convinced that this will boost private and business demand, support economic recovery across the board as well as accelerate a ‘green’ renewal of the vehicle fleet currently on Europe’s roads. Purchase and investment incentives should be based on similar criteria across Europe, drawing on both national and EU funding. Finally, such schemes should be enhanced by scrapping premiums, also taking Europe’s climate ambitions into account.

I strongly believe that it is crucial to bring the entire automotive value chain back into motion now.

Let me stress that we are very thankful for the continued cooperation with, and support from, the European Commission, and I would especially like to thank Commissioners Timmermans, Breton and Schmitt for valuing the strategic importance of the auto sector.

As you can tell, industry has proposed some very concrete plans, we are now counting on both the EU and member states to act and deliver in the short term! The Recovery Package presented by the Commission is a solid starting point, but I sincerely hope that the Commission will show ambition when elaborating on the substance of the plans, so that we can re-launch the automotive sector in a strong and green way.

I am hopeful that the European Commission will explain the details of the planned initiatives as soon as possible. Time is of the essence after all.

Eric-Mark Huitema
Director General of ACEA

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