Europe’s auto industry faces a tough 2020, says GlobalData

Following the new and tighter EU CO2 emissions rules for cars sold in Europe coming into effect in 2020, David Leggett, automotive editor at GlobalData, a leading data and analytics company, said that the European industry will find 2020 “another hugely competitive year”, with increased complexity, due to car-makers factoring in “push and pull for models according to new EU CO2 fleet average rules.” Leggett continues, “They will be attempting to keep exposure to potentially very hefty fines as low as possible.”

“From 2021, but phased in from 2020, the EU fleet-wide average emission target for new cars will be 95g CO2/km (the current level is estimated to be in the region of 120g/km, making the target a serious challenge for the industry). In 2020, the emission targets will apply for each manufacturer’s 95 per cent least emitting new cars. From 2021 on, the average emissions of all newly registered cars of a manufacturer will have to be below the EU set target.

“The European market’s shift away from diesel and the growth of crossovers and SUV segments makes the aim of reducing fleet CO2 averages in line with tighter targets much more difficult.

“If the average CO2 emissions of a manufacturer’s fleet (vehicles sold in EU) exceed its EU-issued target in a given year, the manufacturer has to pay an excess emissions premium for each car registered. The company penalty will be EUR95 for each g/km of target exceedance, fines that could quickly mount up into billions of euros. Estimates suggest that fines in Europe for car companies could total in excess of EUR30bn based on the current composition of sales.

“Manufacturers face a big challenge to optimise their engine offerings and model sales this year in order to avoid or minimise EU fines. With overall European car demand flat or declining in 2020, meeting the EU’s new CO2 rules will reinforce the tough operating environment for automotive companies in the region and add to pressures on their global level of competitiveness.”