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Europe’s premium carmakers face fines over EU economy targetsBack

EuropeanEurope’s premium carmakers still have significant ground to make up in the race to bring down carbon emissions and avoid billions of euros in fines from Brussels.

A report has set out the progress being made by the top 13 carmakers in Europe by sales, and found that Germany’s big three — Volkswagen, Daimler and BMW — and UK-based Jaguar Land Rover are on track to miss minimum fuel economy targets set by the European Union.

The EU has some of the most stringent environmental targets in the world and wants carmakers to achieve average emissions of 95 grammes of carbon dioxide per kilometre by 2020-21.

But the report, produced by PA Consulting, lays bare the challenge European manufacturers face in cutting emissions amid a surge in demand for heavy sport utility vehicles and limited appetite for hybrid and electric cars.

The study worked out the company-specific 2021 targets for the carmakers by calculating the average weight and CO2 emissions of vehicles sold between 2007 and 2013, factoring in the “supercredits” that manufacturers receive for selling electric vehicles.

PA Consulting, which works with many of the leading carmakers and auto parts suppliers, then forecast sales for the period 2014-21, based on the company’s insight into the various manufacturers’ plans for electrification, engine optimisation and weight reduction.

Carmakers such as Renault, PSA Peugeot Citroën, Toyota and Fiat Chrysler Automobiles were found to be on-track to meet the fleet-average targets, while Hyundai, Ford, General Motors and Nissan were close to achieving the objectives.

But the three German brands and JLR were each set to miss the goals by 4 grammes or more.

Were that trajectory to continue, the carmakers would face crippling fines of €95 for each gramme in excess of the target, multiplied by their annual sales in Europe. That means VW would face a fine of up to €1bn in the first year after the objectives are phased in.

The four carmakers declined to comment on the report as they had yet to review the details, though each stressed they were committed to meeting the targets.

VW has repeatedly pledged to reach the goals, and this month said it was investing more than any other manufacturer in new product technology. Martin Winterkorn, chief executive, said at last year’s Paris motor show that every gramme of CO2 reduction in its European fleet in Europe cost the group almost €100m a year. BMW said it had new efficient models coming out soon, such as the large X5 plug-in hybrid this year, as well as further improvements to its gasoline and diesel variants.

JLR said it would seek to increase its use of light-weighting technologies, engine downsizing and hybridisation. Daimler, owner of the Mercedes-Benz and Smart car brands, said that by 2017 it would have 10 plug-in hybrids in its portfolio.

“But the customer has to buy them,” the Stuttgart-based company added. “It doesn’t help us if we have brilliant hybrids in the showroom but the customer only buys V12 [engines].” However, Greg Archer, clean vehicles manager at campaign group Transport & Environment, said carmakers could drive down emissions with updated internal combustion engine technology and better aerodynamics. “This argument that they have to sell lots of electric vehicles to meet their targets is not borne out by the evidence,” he said.

Source: Financial Times

Posted by Sue Robinson on 27/03/2015