EXCLUSIVE / This year is likely to be the worst on record for car sales in the European market because of the recession, said Ivan Hoda?, head of the European Automobile Manufacturers' Association ACEA.
Hoda? told EURACTIV that although the global industry was having a “very good year”, Europe’s car showrooms were facing a turbulent period.
“It will be probably the worst year for car sales in Europe,” he said. “We went down 8.5% last year – 2012 was the worst year since 1995 – and 2013 will be 5%–8% down probably. It is really linked directly to the economic situation in Europe.”
“Europe cannot continue running its automotive industry on the basis of 30%-35% over-capacity,” he added. “It is not possible in the long term.”
In February, Europe’s car sales fell to their lowest-level for 23 years, contracting 10.2% compared to the year before, making it the slowest February since ACEA began compiling figures in 1990.
Some 15-20 factories were currently running at below 50% capacity and “we have to reduce capacity in one way or another,” said Hoda?.
Germany beats the odds
Surprisingly though, while it may be the worst of times for domestic car sales, it is among the best of times for Europe’s car exporters – particularly large premium brand German models, which are out-performing their French and Italian rivals.
“The problem is that the capacity is not distributed equally across Europe,” Hoda? said. “We have less over-capacity in Germany and more in other countries [such as] France, Italy.”
A period of consolidation “probably” lay ahead, he added.
This phenomenon has created tensions within ACEA over several issues and Hoda? admitted that it posed challenges for the organization in presenting a united front.
'Blood on the walls'
Sources say there was “blood on the walls” at a March 2012 board meeting in Madrid that tried to thrash out a common position on the EU’s CO2 in cars proposal.
Hoda? declined to comment on this but other industry voices confirm that divisions around the table led the discussion to go in an undesirable direction.
The diverging conditions facing national car makers were also having a negative impact on policy making at the European level, according to the ACEA secretary-general.
“The implication is that it is extremely difficult to have a European policy,” he said, especially in comparison with the US, where President Barack Obama had given loans to big manufacturers.
But “it is extremely difficult to do it across the EU, where you have 27 different member states and you don’t have the policies or instruments to deal with it at the European level,” he continued. “So what will have to happen – what is happening now unfortunately – is that we see that these things are being dealt with at the national level.”
Car-makers reconcile with 95g CO2 target
The most far-reaching piece of Europe-wide legislation currently jangling auto-industry nerves is a proposal to limit CO2 emissions from cars to 95 grams of CO2 per km (g/km) by 2020, and from vans to 147 g/km.
“We have reconciled ourselves with it,” Hoda? said. “It will be very costly but I think that we should be able to do that. But that’s also the limit that we can do – in 2020.”
Hoda? confirmed that the industry wanted no more than eight years lead time for any new fuel efficiency goals in 2025 or 2030, and insisted that they not be what he called “political targets”.
Straws in the Brussels wind suggest a trade-off between the Commission and ACEA over acceptance of the 2020 target in exchange for a delay in any new targets until 2017. If this is true, however, it has not stopped skirmishes at the legislation’s edge over proposals for super-credits, which Irish presidency sources believe could dilute the EU’s planned legislation.
ACEA maintains that the new CO2 targets are the world’s toughest. But a recent European Commission non-paper, seen by EURACTIV has, says that proposed changes to super-credits – which ACEA supports – would increase actual emissions to between 99-123g/km by 2020.
Within the ACEA family, Hoda? accepts that less profitable car manufacturers could face problems meeting the 2020 targets.
“There might be countries – I am not going to name them – for which it might be slightly easier,” he said. “There might be some for which it is slightly more difficult but for the industry as such, it is extremely challenging.”
Auto-industry divisions appear to have carried over into the debate with ACEA finding itself unable to agree a common position on a cost curve in the regulation to calculate specific emission targets for individual cars. German cars tend to be larger than French and Italian makes.
“The 60% [cost-curve slope in 2020] was a compromise and it benefits some more than the others,” Hoda? said. “The co-efficient has been changed by the Commission and we have at the end of the day, decided to leave it out of the ACEA position. We are not addressing it to the left or to the right.”
One issue that ACEA is addressing though is a controversial study by the German IKA consultancy which found that CO2 emissions in vans could only be reduced by a maximum of 19% by 2020 at a cost of €8,000 per vehicle, and then only with the use of ten combined technologies.
In March, an EU official told a public meeting in Brussels that the study was “worthless” as current hybridisation practises already in use for light commercial vehicles (LCVs) could achieve the target, with existing technologies.
Hoda? though was unphased. “I agree with the results of the [IKA] study,” he said, noting that increases in cross-purchase costs had “a subtle repercussion” on people who used them. “There will in the future be LCV hybrids,” he added.
However, a hybrid retrofit system provided by a UK company claims to reduce fuel and CO2 usage by 20.1% already, and EU studies show a much greater potential for CO2 abatement in LCVs by 2020
A documentary on Germany’s ZDF channel earlier this month called into account IKA’s objectivity, as they say it now received 21% of its funding from the auto-industry.
The LCV study was funded by Germany’s automobile association, the VDA. The European Parliament’s rapporteur on legislation for CO2 in vans, Holger Krahmer, launched the report in March.