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European Commission

MEMO

Brussels, 6 June 2012

Vision 2020: CARS 21 Group delivers recommendations to help car industry reach new heights

The CARS 21 group presented today its final report calling for rapid progress and outlining concrete actions to be taken on important subjects such as electro-mobility, road safety and Intelligent Transport Systems, market access strategy as well as review of the regulations on the CO2 emissions from cars and vans. The recommendations contained in the December 2011 Interim Report of the CARS 21 Group (MEMO/11/862) are reaffirmed today, but the Final Report goes much further as it sets out a complete vision for the automotive industry in 2020 and provides additional recommendations.

The vision for the automotive industry in 2020

The report sets out the following key characteristics of a strong and competitive automotive industry and progress towards sustainable mobility at the horizon of 2020. Those key characteristics should be:

  • An automotive sector which remains of strategic importance and a cornerstone for the EU industry and economy, providing quality employment to millions of workers in the EU;

  • A strong manufacturing base in the EU for road vehicles, manufacturing a sizeable part of the vehicles sold on the EU market;

  • An automotive industry that is leading in technology (clean, fuel-efficient, quiet, safe, connected);

  • A sector exporting a larger portfolio of vehicles to third markets, the latter offering a genuine level playing field;

  • New vehicles purchased by EU consumers, which are clean in terms of regulated pollutants, more fuel-efficient, safe and connected;

  • A portfolio of propulsion technologies, dominated by the advanced combustion engine technology, although increasingly electrified. In addition, the deployment of vehicles with alternative powertrain concepts (such as electric and fuel cell vehicles) is growing significant;

  • Appropriate refilling and recharging infrastructure for alternative fuel vehicles being built up, as required for their market development;

  • A workforce in both manufacturing, R&D and servicing that is trained and prepared to work with a multitude of technologies.

CARS 21 recommendations

The CARS 21 members are committed to bringing about the transition in the coming years, within their respective area of responsibility. This vision will be brought to reality by the implementation of CARS 21 recommendations.

More concretely, the implementation of recommendations spelled out in CARS 21 Final Report will bring the following changes:

  • While the Internal Combustion Engine will remain dominant in the 2020 perspective, a portfolio of alternative fuels, covering electricity, hydrogen, biofuels, methane, LPG and others, will be necessary to meet the policy objectives. The implementation of the recommendations will ensure that the roll-out of alternative infrastructure is in step with the technological development to enable the market penetration of vehicles powered by these alternative fuels.

  • The electric vehicles will become a valid choice for the European consumer. The Group recognised that charging of electric vehicles is expected to be performed mainly at home/work, but there will be also a need for publicly accessible recharging infrastructure. In order to ensure interoperability across the EU, standardisation on the European level is needed. This is why the Commission will start an impact assessment into the legislative options and technical modalities, ensuring that practical and satisfactory solutions for the infrastructure side of the interface are implemented throughout the EU.

  • The clean and energy-efficient vehicles will be not only deployed but also produced in Europe with the European support for the research, development and innovation on a broad range of automotive issues and critical future technologies. In addition, a specific and major initiative on breakthrough technologies (including, among others, electrification of combustion engines, hybrid and electric vehicles, fuel cells, electrical and electronic systems) will be envisaged, in parallel with the continuous EIB support to the automotive sector as well as to infrastructure and services.

  • Regulation for reduction of CO2 emissions will remain a priority without however affecting competitiveness of the automotive industry. In order to achieve ambitious goals in relevant policy areas, the CARS 21 Group wants that a real integrated approach is fully implemented. Measures to be taken must be proportional and in line with the principles of cost-effectiveness and better/smart regulation, taking also into account the affordability of new vehicles.

  • The 2020 targets for the cars & vans CO2 regulations are technically feasible and will be pursued. Production costs will increase, particularly for cars, but are lower than in previous estimates. Users and society would also benefit from lower fuel consumption. Flexibilities need to be considered in order to achieve a cost-effective implementation of the targets, but they should not effectively weaken the targets.

  • A new driving test-cycle and test procedure for measuring fuel consumption and emissions will be developed to be more representative of real-world driving and address the climate and air quality challenge. This will be complemented with measures controlling vehicle emissions in use, based on a thorough analysis, with the aim of delivering a timely reduction of real-world pollutant emissions, hence, contributing to improved air quality.

  • Road safety will be improved further, based on complementary actions on vehicles, infrastructure and driver behaviour. The right policy mix needs to be found, combining regulatory with other measures. Priorities include motorcycles, safety of new vehicle technologies (EVs) and technologies supporting driver behaviour and enforcement of road rules (speed limit devices, ITS, ecodriving).

    • EU trade policy will aim to take full account of the importance of maintaining a strong and competitive automotive manufacturing base, using both multilateral and bilateral tools. Both should tackle key issues of removing tariff and non tariff barriers. Free Trade Agreements should aim at full tariff dismantling and removal of Non-Tariff Barriers. The overall impacts of each trade negotiation should be assessed.

    • The EU will promote the reform of 1958 UNECE Agreement with a view to make it more attractive for third markets. As part of this reform, the introduction of an International Whole Vehicle Type-Approval system should be promoted by all relevant stakeholders.

    • Multilateral regulatory cooperation under the UNECE framework will be complemented with bilateral regulatory cooperation in particular with emerging countries, but also with, for example, the United States - under the Transatlantic Economic Council - and with Japan.

    Action Plan in response to the current economic situation

    In order to bring about the transformation of the industry as spelled out in the vision for 2020 and set the sector firmly on a path towards competitiveness and sustainable growth, the EU will also have to react to the current economic situation.

    Actions in following three areas are envisaged:

    • Promoting economic growth by providing European financing for research and investments which are needed to develop the propulsion technologies of tomorrow, the safety and comfort systems and production tools that will be demanded by the future markets, regulations and consumers.

    • Managing the costs and structure for doing business by applying the principles of smart regulation, integrating an in-depth assessment of the impacts on industry, society and other stakeholders, notably the associated costs and benefits, are strictly implemented. Also the cumulative effects and effective implementation need to be assessed and specific attention needs to be paid to the constraints of small and medium-sized enterprises (SMEs).

    • Supporting the internationalisation of EU industry enabling a larger portfolio of vehicles assembled in the EU to be exported with actions in two complementary areas:

    • improving market access through trade negotiations and

    • work with international partners on regulatory and procedural convergence.

    In order to devise and implement the Action Plan, a constructive sectorial dialogue for the automotive industry must take place between stakeholders concerned, focused on internal market principles and the general European interest.

    While those actions remain yet to be developed, another key recommendation of the CARS 21 Final Report is here of key importance – the necessity to anticipate the change. The Group agreed that anticipation of change should be holistic and respect all factors influencing the competitiveness and the long-term perspective of companies. It should be reflected effectively in companies' long-term strategies with due attention paid to human resources skills and availability. Restructuring, when necessary, should not be resisted, but widely recognised good practices should be followed, to minimise its social impact.

    Next steps

    The European Commission has announced its intention to adopt a Communication on the outcome of the CARS 21 process. The Communication will also announce how the Commission proposes to implement the policy recommendations of the group in its policies. In addition, CARS 2020 Group will be set up, meeting annually in order to monitor the progress achieved in the implementation.

    The full report will be published shortly on the CARS 21 website

    Background figures

    The European automotive industry is a strategic sector for the European economy because:

    • it is one of the biggest industries in Europe with more than € 700 billion turnover

    • it provides over 12 million direct and indirect jobs with a significant share of highly skilled workforce

    • it is a source of growth and prosperity of the European citizens

    • its contribution to the trade balance reached almost € 92 billion in 2011

    • it is a key driver of knowledge and innovation

    • it is a largest private investment in R&D (around 30 billion € in 2010) and a leader in a development of world leading technologies

    • R&D in the automotive sector plays a central role for technological development in many related industrial sectors

    1. Production of light vehicles (passenger cars and vans)

    source: LMCA GCAT (Q1 2012)

    2. Sales of passenger cars

    source: LMCA GCAT (Q1 2012)

    While the EU market is behind the Chinese market in terms of volume, the situation is radically different in terms of value of sales which is still considerably lower on all the markets of emerging economies. Also the European manufacturers seem well positioned to benefit from the opportunities on the emerging markets.

    3. Electric vehicles and alternative powertrains

    225,000 electrified passenger cars is forecast to be sold in Europe in 2012 (source LMCA)

    700,000 electrified passenger cars is forecast to be sold in Europe in 2015 (source LMCA)

    4. Employment (source: ACEA, based on Eurostat)

    Around 12 million jobs (mostly highly skilled) are directly or indirectly depending on the European automotive industry.

    5. Trade balance (source: Eurostat)

    Automotive industry provides positive contribution to the trade balance of almost €92 billion (2011)

    New vehicles

    Imports to EU-27; exports from EU-27, 2007-2011

    Product group: Group 87 (Motor vehicles and parts and accessories thereof)

    Source: Eurostat, Comext database

    Parts and accessorises

    Imports to EU-27; exports from EU-27, 2007-2011

    Product group: Group 87 (selected items only): Parts and accessorises of motor vehicles

    Values in euros

    Source: Eurostat, Comext database

    6. Research & development

    In 2010, the EU automotive industry was the biggest investor in R&D (€ 30bn/year), followed by Japan and the US. It also remains the biggest private investor in Europe.

    7. Automotive imports into EU-27 (in Units)

    From: Brazil, China, South Korea, India, Russia, USA, Turkey, Morocco, Tunisia, Mexico, South Africa, Japan

    2007-2011

    Product group Group 87 (selected items only): New passenger cars

    Source: Eurostat, Comext database

    8. Automotive imports into EU-27 (value in EUR)

    From: Brazil, China, South Korea, India, Russia, USA, Turkey, Morocco, Tunisia, Mexico, South Africa, Japan

    2007-2011

    Product group Group 87 (selected items only): New passenger cars

    Source: Eurostat, Comext database


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