German automakers multiplier proposal for high-emission vehicles against zero-emission vehicles built, 2020 EU legislation
In July 2012, the European Commission had published a proposal to review Regulation 443/2009 which sets targets for CO2 emission where new passenger cars are concerned. This proposal also took into account sales of ‘ultra low carbon vehicles’ (ULCV) through supercredits.
This is aimed at rewarding the German auto makers to permit them to manufacture high emission vehicles in a certain proportion to the amount of zero emission vehicles produced. By this coming into effect, the result will be a lower impact of European Commission’s proposed 2020 legislation.
443/2009 proposal has set car CO2 regulations at 130 g/km for fleet average of all new cars in 2015 and an additional target of 95 g/km in 2020. The guidelines set in 2012, require an average of 65% of auto manufacturer’s newly registered cars to comply to the limitation at start. This number rises to 75% in 2013, 80% in 2014, and 100% from 2015 onward. The targets are to followed by one and all across car segments, which is a daunting challenge for luxury automakers Mercedes-Benz, BMW and Audi which have powerful cars making it more difficult to adhere to the set guidelines.
The German government has gone to the European Commission with a last-minute reformulation of its supercredit proposal, but it appears there is little appetite to make concessions on future emissions regulations. Please find below a report from IHS Senior Automotive Analyst Tim Urquhart on the current situation.
IHS Automotive perspective
The German government, having met with a lack of support for its supercredit concept to weaken the forthcoming EU emissions legislation has put forward a new proposal that it calls a “multiplier”, which is still aimed at rewarding the German OEMs by allowing them to manufacture high-emission vehicles in recognition for the number of zero-emission vehicles they build.
The proposal is aimed at lessening the impact of the European Commission’s proposed 2020 legislation that governs passenger car emissions, although the lack of support for the original supercredit proposal suggests that repackaging the basic concept will not win the concessions the German OEMs are looking for.
The green constituents of the European Parliament were disappointed when the current emissions regulations, which were introduced in 2012 and which gradually reduce passenger car emissions to 130 g/km were watered down, especially as volume European OEMs appear to be meeting the target with relative ease. The German government and the companies it is lobbying for will face a tough task in making a case for weakening the proposed 2020 legislation which will target emissions of 95 g/km CO2.
The Commission’s proposal for the emissions that will govern passenger car emissions from 2020 is a reaction to the fact that European OEMs are on target to meet the current regulatory framework, introduced in 2012, with relative ease. The original legislation was introduced last year on a phasing-in structure, which required that an average of 65% of each manufacturer’s newly registered cars must comply with the limit value curve set by the legislation. This will rise to 75% in 2013, 80% in 2014, and 100% from 2015 onwards.
The legislation also contained a further condition that would in theory benefit the German OEMs, which manufacture a higher proportion of higher-emitting passenger cars than their French and Italian counterparts, in the form of the limit value curve. The EU described the limit value curve as a tool that allows heavier cars “higher emissions than lighter cars while preserving the overall fleet average. Only the fleet average is regulated, so manufacturers are still able to make vehicles with emissions above the limit value curve provided these are balanced by vehicles below the curve.”
So the general feeling is that the German OEMs were already well catered for in the original legislation and given the boom in premium car sales in China and US over the past three years, the general feeling among other EU member states and OEMs based in those countries is that the German OEMs have had something of an easy ride in recent years, in stark comparison to the likes of Fiat-Chrysler, PSA Peugeot-Citroën and Renault, especially as a result of these companies’ disproportionate reliance on the European market, which is currently at its weakest in decades.
As a result, there seems little desire by the other member states to make life easier for the German OEMs, especially if these concessions allow them to sell a higher proportion of higher-emitting, highly profitable luxury cars and SUVs in the European market while the likes of Fiat, PSA and Renault continue to struggle to defend market share and generate profit in the region. As such, despite reports of some strong-arm tactics last week, it appears the German government may be on a hiding to nothing with its attempts to repackage its original supercredit proposal. In addition, with the European fleet average CO2 emissions now at 132 g/km according to Reuters, as things stand the OEMs are on target to meet the current emissions framework with ease. As such, it is unlikely that the substantial green lobby in the European Parliament is likely to be in the mood to make concessions that will support the German OEMs in this manner.