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.
IHS Automotive perspective | |
Significance | 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. |
Implications | 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. |
Outlook | 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 German government has offered an amended proposal to weaken the draft legislation which is aimed at bringing to law a commitment to lower passenger car emissions to 95g/km by 2020, according to a Reuters report. The German government had previously suggested its supercredit concept as a way of crediting the German OEMs for manufacturing low-emission and zero-emission vehicles (ZEVs), allowing them to continue to manufacture relatively high-emitting sport utility vehicles (SUVs) and performance cars with lower penalties. However, the German government has abandoned this proposal after failing to get enough support from other member states, according to sources quoted in the Reuters report, and has replaced the proposal with another technical device, referred to as a multiplier. It would still buy time for German automakers because it would multiply the number of supercredits a manufacturer earns for each low-emission vehicle.
The legal and executive body of the EU, the European Commission, is looking to implement the legislation to set a goal of 95 g/km CO2 as an average for new vehicles sold in Europe starting in 2020 (equivalent to 4 l/100km; 59 US mpg; 71 UK mpg). The EU fleet average is now around 132 g/km. However, it appears that the lobbying attempts by the German government at this stage of the legislation's passage through the European Parliament have caused problems. Speaking on the condition of anonymity, a European diplomat said, "The latest German proposals are causing problems and really came very late. I'm not sure if we can get a deal".
Outlook and implications
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 (see Germany: 20 June 2013: German politicians ramp up pressure on EU over future emissions regulations), 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.