Visegrad car associations ask EU to decrease emission limits

Visegrad car associations ask EU to decrease emission limits
Average emissions from new vehicles in the EU have dropped by 28% since 2005, and should drop by 42% by 2021.
By Jaroslav Hroch in Prague April 16, 2018

Automotive industry associations of Czechia, Slovakia, Poland and Hungary will ask the EU to reduce limits on CO2 emissions for new cars from 2021–2030 from a projected 30% to 20%. The European Commission should also decrease its additional target of reducing emission by 2025 by 15%, Czech Automotive Industry Association (AIA) head Bohdan Wojnar said following a Visegrad Group summit on April 13.

Strict limitation of emissions levels can cause a significant drop in production and hurt their economies, V4 car associations warn. While the car industry is a key sector in future growth across the V4, Slovakia and Czechia are dependent on it.

“We are fully dedicated to decarbonising the transport sector, so we welcome and support all effective and economically feasible ways of reducing CO2 emission for motor vehicles,” Wojnar said, noting average emissions for new vehicles in the EU has dropped since 2005, falling by 28%, and should drop by 42% by 2021.

The EC proposals of autumn 2017, now in the European Parliament, are not technologically neutral and may complicate the transition to low-emission vehicles, the car producers say. “Every regulation of the car industry should keep in mind that this sector is beneficial to GDP growth, export and employment not only for the V4 but the EU as a whole,” Wojnar added.

Moreover, the carmakers claim that they won’t have enough time to conform to new regulations. Whether the low-emission cars will be successful depends on customers and the popularity of vehicles with alternative propulsion.

Another question troubling carmakers is infrastructure concerning alternative propulsion vehicles. Given delays and other problems with motorway infrastructure and the quality of roads, it could be a long haul.

The biggest car producers in the V4, Czechia and Slovakia, each make over 1mn cars annually, or 13% of total EU car production. When measured in per capita terms, they are the top producers worldwide.

“To the relatively high dependence on the car industry, you can add the high share of this industry in the overall added value production. Both countries are thus at the mercy of the cyclical demand for new cars in Europe, which is at a peak right now,” stated an analyst from CSOB, Petr Dufek, on March 30.

The whole V4 produced almost 3.5mn cars in 2016, according to the European Automobile Manufacturers Associations. Moreover, in 2017, all four countries were in the top ten EU producers of passenger cars. Czechia ranked first of them in fifth position (right after much bigger markets of Germany, Spain, France and the UK), Slovakia followed in sixth, Poland eighth and Hungary ninth.

The current growth of GDP in the countries is to some extent linked to the car industry. And, for example in Slovakia, industry as a whole wouldn’t grow without the car industry input. This proves to be risky, as demand for cars can drop. Warning signals occurred already on April 9.

Czechia’s foreign trade showed a surplus of CZK18bn (€710mn) in February, which was CZK2.9bn lower y/y, the preliminary data issued by the Czech Statistical Office showed. Moreover, on April 5, the Car Importers Association said that sales of new cars in Czechia dropped by 0.3% y/y to 67,873 vehicles in Q1, whereas in March alone sales declined significantly by 9% to 24,453 cars.

“It is yet another piece of the anticipated cooling down of the demand for the cars in the EU. This is due to market saturation after continuous and significant four-year growth of demand for cars,” Cyrrus chief economist Lukas Kovanda said in a note, adding that stricter emissions regulation and uncertainty connected to Brexit played a negative role.

The registration of new cars with alternative propulsion was at the level of 5.8% in the EU 15 in 2017, with electric cars making up only 1.5%. For the Central, Eastern and Southern parts of the EU the market share of electric cars and plug-in hybrids is only 0.5%.

The car industry in V4 employs over 636,000 people directly and over 1.3mn indirectly.

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