Carmakers in dispute over CO2 regulations

A DISPUTE has broken out over carbon dioxide regulation between Germany’s premium carmakers and their cash-strapped French and Italian competitors.

The disagreement centres on the complex but financially critical formula used by the European Commission to assign long-term CO2-cutting targets to individual manufacturers.

The EU’s present regulation, set in 2008, calls on manufacturers to cut cars’ average CO2 grams per kilometre to 130 by 2015, a target most carmakers endorse and say they can meet. At the time, carmakers agreed on a “burden-sharing” formula that takes into account weight, meaning makers of larger cars, led by Germany’s BMW, Daimler’s Mercedes-Benz and Volkswagen’s Audi – had to cut more of their fleet’s CO2.

However, the Germans are now in disagreement with PSA Peugeot Citroën, Renault, Fiat and General Motors-owned Opel over how the burden will be apportioned for 2020, for which the target will be 95g/km. German carmakers want the same “target curve” as agreed four years ago, and are pressing their case in Brussels through the VDA industry association.

However, Europe’s mass- market carmakers, whose research budgets have been squeezed by the economic slowdown, say that maintaining the current grading would saddle them with unacceptably high costs.

The dispute came to a head at a meeting of Acea, the European carmakers’ association through which the industry seeks to present a united front on policies such as CO2 regulation.

“People are getting tired with this constant German finger-wagging,” said one official at a mass-market carmaker.

The proposal is in consultation within the European Commission’s different departments, and a decision could be reached as soon as this week.

Europe’s car industry is already divided over the issue of excess plant capacity, which primarily affects carmakers such as Peugeot, Fiat and Opel. VW, Daimler and BMW recently vetoed a proposal by Sergio Marchionne, Fiat’s chief executive and Acea’s current president, that Brussels take a leading role in helping manufacturers restructure their operations. – (Copyright The Financial Times Limited 2012)