Time is running out for European carmakers. “I’d be surprised if we didn’t see a few bankruptcies, considering the amplitude of the coming change.”
PARIS/FRANKFURT (Reuters) – Time is running out for European carmakers, which have waited until the last minute to try to meet ambitious EU emissions targets and face billions in fines if they fail to comply.
Manufacturers from PSA Group to Volkswagen are using this week’s Frankfurt auto show to reveal the new models and strategies they hope can slash carbon dioxide emissions within months.
But it is a challenge fraught with danger, as the cost of pushing pricey technology on unconvinced consumers could hammer profits in an industry already suffering a downturn in sales.
“You have cars that cost an extra 10,000 euros to build, fleet-emissions targets requiring a certain sales volume and consumers who may or may not want them,” said one PSA executive.
“All the ingredients are there for a powerful explosive.”
By next year, CO2 must be cut to 95 grammes per kilometre for 95% of cars from the current 120.5g average – a figure that has risen of late as consumers spurn fuel-efficient diesels and embrace SUVs. All new cars in the EU must be compliant in 2021.
The timing could hardly be worse, with the main auto markets in decline and the sector braced for a chaotic UK exit from the European Union and a lengthy U.S-China trade war.
The industry has long since given up pushing for the goals to be relaxed – a political impossibility underlined by a resurgent climate protest movement that has added the Frankfurt show to its target list. Greenpeace inflated a large, black “CO2” balloon outside a main entrance on Tuesday.