Having the world’s toughest CO2 emissions standards has helped to keep low-cost competitors from China and Russia out of the European market. So Europe’s automakers may be making a big mistake in trying to postpone, tame or reduce even tougher future emissions limits now under consideration by EU regulators.
The EU’s harsh CO2 limits, along with the world’s most demanding pedestrian safety regulations, have protected the region from a flood of cheap, dirty, unsafe imports from parts of the world where less stringent laws make cars cheaper to build and cheaper to buy.
This regulatory protection, which some industry insiders dub “Fortress Europe,” was crucial during the 2008-2013 sales slump. If it were not for Euro 5 and Euro 6 tailpipe emissions rules and strict pedestrian protection requirements, Chinese automakers could have made big inroads in Europe during the Great Recession. New cars from China’s automakers would have cost less than used cars from established brands, giving the Chinese an advantage while providing another challenge to the region’s already-hurting automakers.
A similar scenario could become a reality if regulations are weakened. With growth in their domestic market slowing, Chinese automakers could divert cars to Europe to keep their factories at home running at high capacity. AvtoVAZ, Russia’s largest automaker, could flood the EU with Lada cars and SUVs costing below 5,000 euros as sales at home plunge during the country’s economic crisis.
Same old movie
Europe’s automakers treat stricter regulations as a “life-or-death” issue. The industry’s top executives will again sound the alarm at this month’s Frankfurt auto show. It will be like watching the same movie again. We will see headlines such as “European carmakers are lobbying for a three-year delay to new rules that would reduce fuel-consumption” or “European automakers are seeking a five-year delay on tougher CO2 emissions targets.” It does not matter whether these headlines relate to tougher targets for 2015, 2020 or 2025 because the industry always fights any new regulation with all its might. Then, when the regulation is imposed, the industry manages to meet the target, often ahead of schedule.
When in 2007 the EU imposed a 2015 target to reduce the fleet average for CO2 emissions from new cars sold in Europe to 130 grams per kilometer, the industry said it was impossible. However, emissions fell below 130g/km two years ahead of schedule -- reaching 127g/km in 2013 and falling to 123g/km last year, according European Environment Agency (EEA) data.
The 130g/km target was weaker than the one originally proposed by the EU. Regulators wanted average emissions reduced to 120g/km by 2012 and the auto industry lobby was able to raise the bar to 130g/km and to delay the implementation of the target by three years. Strong lobbying by German automakers succeeded in postponing the next target – 95g/km for 2020 – by a year to 2021.