Paddy Comynlooks at what other EU states are doing to save their car industries
UNITED KINGDOM
What state is the industry in?
UK sales fell 11 per cent last year, with a 21 per cent drop in December. The pound has fallen against the euro and the dollar in the past six months. As a result carmakers such as Ford and GM look set to raise prices in the UK to counter the weak pound.
Bloomberg reports that the weaker pound means manufacturers in Europe get fewer euros for cars sold in Britain, depressing profits. Layoffs and factory closures have affected plants producing Nissan, Honda, Land Rover and Jaguar cars in the UK.
What action is being taken?
Business secretary, Lord Mandelson last week announced a package of loans and guarantees for the reinvention of the UK motor industry.
The government is set to offer guarantees to unlock £1.3bn of loans from the European Investment Bank. Mandelson said it will also offer a further £1bn in guarantees or loans to cover investments which bring special value to Britain. A further £35m could be made available to increase funding for workers in the automotive sector.
GERMANY
What state is the industry in?
The German market was sluggish in 2008. For the year as a whole, sales totalled 3.1 million passenger cars, a decrease of 1.9 per cent compared to 2007 and the lowest in Europe’s largest car market since reunification 19 years ago. According to Germany’s Verband der Automobilindustrie, 226,000 new passenger cars were sold in December 2008, a 7 per cent drop on the same month in 2007.
What action is being taken?
In January, the German government said it would provide €2,500 for scrapping a car older than nine years and then buying a new vehicle that meets at least the Euro 4 exhaust emission standards. This is applicable until December 31st, 2009. The German government has put aside €1.5billion to finance the scheme. The German car dealers’ organisation expects 200,000 more cars to be sold as a result.
There is also an exemption from annual circulation tax for new cars purchased before 30 June 2009. This exemption is valid for one year for Euro 4 cars, and for two years for Euro 5/6 cars.
FRANCE
What state is the industry in?
French new-car sales fell 7.9 per cent year-on-year in January after a 15.8 per cent drop in December, according to the CCFA French auto industry body. The combined market share of Renault and PSA/Peugeot-Citroen in January dropped to 50 per cent compared to 54.1 per cent in the first month of 2008.
What action is being taken?
France has taken action to awaken its car industry with a €1bn financing facility for automotive finance companies (8 per cent interest rate). There is also a scrappage scheme in place, with a €1,000 incentive for the scrapping of a vehicle of more than 10 years old when this vehicle is replaced by a new passenger car emitting 160g/km of CO2 or less. The same incentive applies when a trader replaces a vehicle of more than 10 years old with a new light commercial vehicle, regardless of the latter vehicle’s CO2 emissions. These measures are valid December 31st, 2009. France has also announced an aid package of up to €6 billion for struggling carmakers.
ITALY
What state is the industry in?
Compared to the same period in 2008, new-car sales in Italy fell by almost 33 per cent to 157,418 units in January 2009. Fiat’s market share is up but their sales dropped 31.3 per cent for their three brands. The Italian car market dropped 13.4 per cent in 2008.
What action is being taken?
None so far, but rumours abound that the government will introduce incentives of €1,000 to €1,500 to encourage customers to swap old cars for new models and this may have accounted for the poor sales in January. Sales incentives for the sector could amount to €290 million. Fiat has agreed to form a partnership with Chrysler in order to ensure survival.
SPAIN
What state is the industry in?
Registrations fell almost 42 per cent in January compared to a year ago and industry association ANFAC told Reuters that carmakers desperately need aid. A total of 59,835 cars were sold in January, down by over 12,000 from December. The Spanish car market was down 28.1 per cent for the whole of 2008 as Spain went into recession.
What action is being taken?
There have been government loans made available for car buyers. No interest is due on the first € 10,000 for a period of five years provided the new car has a value of maximum € 30,000 and CO2 emissions of a maximum of 140g/km (160g/km for light commercial vehicles) and provided an old car (10 years-plus or 250,000km-plus) is scrapped simultaneously.
This is also applicable to the purchase of a used car (maximum five years old) provided the scrapped car is at least 15 years old. The scheme is applicable until July 31st, 2010.
SWEDEN
What state is the industry in?
According to BIL Sweden association of carmakers, new car registrations plunged in 2008. Sales in January were down 34 per cent compared to January 2007. BIL Sweden has forecast a 27 per cent drop in car sales for 2009 from 2008.
What action is being taken?
In December 2008, the Swedish government launched a package worth 28 billion Swedish crowns (€2.57 billion) package aimed at securing the long-term viability of Swedish-based vehicle makers. It included funds for a research and development centre as well as credit guarantees and rescue loans.
The head of Volvo cars has called on Sweden’s government to help stimulate the auto industry by reintroducing a cash-incentive scheme for scrapped cars. Chief executive Stephen Odell has also called for a government programme that offers new-car buyers a rebate if they buy an environmentally friendly car to be extended beyond 2009, when it is due to expire.
PORTUGAL
What state is the industry in?
In Portugal, car sales in 2008 were up 5.7 per cent, but figures from ANECRA in Portugal indicate there has been a 51.3 per cent reduction in car sales in January compared to the monthly average for cars sold per month in the last three years.
What action is being taken?
In December, the Portuguese government launched a stimulus package worth €900m for the country’s automotive sector in an attempt to avoid an estimated 12,000 job losses in 2009. An extension of the existing scrapping scheme is being considered. The current scheme provides incentives of €1,000 for cars that are minimum of 10 years old and € 1,250 for cars that are minimum of 15 years old.