European car industry choking on emission rules

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FRANKFURT, Nov 21 (Reuters) EU rules to cut CO2 emissions drew a range of views from industry figures at the Reuters Autos Summit, but all said it would be costly to a sector already hit by pricier raw materials, a strong euro and nervous consumers.

Maria Bissinger, director of corporate ratings at Standard&Poor's, said nearly all the companies she followed had a stable or positive outlook, but uncertainty on the CO2 issue was a long-term problem for the industry.

She noted data from the German VDA car industry association suggested the cost of cutting CO2 emissions to 120 grams per km by 2012, as demanded by the European Commission, would be about 3,000 euros per car. That's on top of 2,000 euros in extra costs since 2005 as a result of other EU regulations, from parts design deregulation, to air conditioning rules, initial CO2 limits and pedestrian protection.

VDA represents carmakers such as Mercedes , Porsche , BMW and Volkswagen unit Audi, which make relatively heavy cars with big engines and high emissions and are likely to find compliance costs higher than for makers of smaller cars such as France's PSA Peugeot Citroen or Italy's Fiat .

The ACEA European car industry organisation says the 120 grams per km level should be seen as an average for the entire industry, not an average per carmaker, but the industry does not always speak with one voice.

The French CCFA association, which champions its nation's makers of relatively low emitting cars, recently said it was not in favour of special treatment for heavier cars.

TOO LITTLE, TOO LATE At the Frankfurt Motor Show in September, chief executives of all the ACEA companies gave a joint news conference in which they asked the European Commission for realistic targets and more time, but again there are dissenters.

Thierry Morin, chairman and chief executive of French car parts maker Valeo , told the Reuters Autos Summit that the Commission had to be very strict and that 120 grams by 2012 was too little and too late.

''That is five years from now; we have to do something quick to help the planet,'' he said.

Valeo's products include some that help cut emissions, such as engine management systems, braking systems that store energy wasted during braking, micro-hybrids and electronic components for use in engines.

But Morin agreed the costs were an issue, and that a family would probably prefer to spend spare cash on other options, maybe leather seats, before lower carbon emissions.

''It has to be made mandatory; we would not have bought safety belts if they had not been made compulsory,'' he said.

Stefan Wolf, CEO of German car parts group ElringKlinger , told Reuters the car industry had to act on emissions but was taking too much heat.

''I am convinced we have to do something. I also think that the automobile industry is too much in focus, because only 12 percent of global CO2 emissions come from cars and the automotive industry, and that is why I think we should also look at other areas and other sectors that contribute much more,'' he said.

Even luxury sports carmakers are on the case. Ferrari general manager Amedeo Felisa said the company wanted to cut CO2 emissions from 400 grams per kilometre to 280-300 by 2012.

Stefan Winkelmann, head of Lamborghini, said his engineers were working on the problem, too.

He said the power/weight ratio was one area they might improve, trying lighter materials for the body and chassis, but with Lamborghini selling just 2,000 cars a year that owners largely drove at weekends, the impact was ''close to zero''.

REUTERS BJR RN2012

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