The booming Asian economy has overtaken Europe's largest car manufacturer Germany to become the world's third largest vehicle producing nation in 2006, as record global production volumes undermine the sector's efforts to reduce its contribution to climate change.
While global motor vehicle production grew 4% in 2006, China increased its vehicle production by nearly 30%, manufacturing more than 7 million vehicles and beating Germany - with its 5.8 million - to third place, behind the US and Japan, according to figures from the Worldwatch Institute.
While the EU as a whole remains the world's largest producer, manufacturing 27% of the record 67 million vehicles placed on the market in 2006, the trend could change radically over the coming decades.
According to automobile market analyst B&D Forecast, Germany could already lose its fourth spot to Russia by 2015 and be knocked out of fifth place by India before 2020.
Recently, European carmakers have been struggling to cope with compliance costs linked to strict EU safety and environmental rules and with the high euro, which have made making cars for export in Europe more expensive, forcing EU manufacturers to restructure or delocalise to cheaper production destinations.
Last year, Germany's Volkswagen fired 3,500 employees in Belgium (EurActiv 22/11/06) and France’s Peugeot-Citroën announced that it would be slashing 4,800 jobs in order to step up profitability.
While Europe's carmakers struggle to come to terms with global competition, the EU is planning legislation that would force them to reduce carbon dioxide emissions from new vehicles to an average of 120 grams per kilometre by 2012 – down from current levels of around 163 g/km.
But car manufacturers are warning that this could up production costs by around €3,500 per car (EurActiv 21/03/07).
The law is currently under debate in the European Parliament. While the MEP in charge of the dossier had called for the deadline to be extended until 2015 in order to give carmakers more time to adjust (EurActiv 26/06/07), Parliament's industry committee, on 18 July, rejected this idea.
Greens/EFA shadow rapporteur on the dossier Rebecca Harms stressed: ''The current 120g CO2/km target had already been approved by legislators ten years ago and was supposed to be achieved by 2005, but no later than 2010''.
The aim of the law is to reduce the car industry's growing contribution to climate change, in line with the EU goal of cutting total CO2 emissions by 20% by 2020.
However, Senior Researcher at Worldwatch Michael Renner said: ''With more cars on the road year after year, regulating auto fuel consumption and emissions alone is not a solution. What is truly needed is a transportation revolution'', adding that cities should follow the examples of the likes of Bogotá and London, which are decreasing their dependence on cars thanks to better land-use practices and an increased commitment to public transportation.