EC Outlines New Strategy for European Auto Industry

February 8, 2007 // Published as a news service by IHS

The automotive industry is a major pillar of the European economy, representing 3% of the European GDP and 7% of employment in the manufacturing sector.

EC President José Manuel Barroso said, "The EU car industries are at the core of our economies. By positively taking up the climate change challenge, they will preserve and enhance their competitiveness in the long term. This is of crucial importance for consumers and workers alike. The strategy we adopted today covers the strategic issues - from road safety to the environment to research - that, if addressed in a timely fashion, will make sure that the EU car industries will remain strong and innovative world leaders."

EC vice president Günter Verheugen, responsible for enterprise and industry policy, said, "Today we have put forward our strategy to create favourable conditions for an innovative and thriving European car industry and to keep jobs in Europe. We have hit the right balance between the need for global competitiveness and progress in safety and environmental performance. We put the emphasis also on research and development to carry the industry well into the 21st century."

The automotive industry in Europe is currently characterised by cut-throat price competition, high raw material and energy prices, a strong emphasis on cost management and a restructuring of production processes. In line with its policy to improve the quality of lawmaking and to face the challenges of a more global competition, the EC in 2004 asked the high-level group CARS 21, which brought together all the main stakeholders (including consumer and environmental organisations), to advise on future policy.

The new EC communication is the EC's response to the report presented by the CARS 21 group. It outlines to the European Parliament and European Union (EU) Council of Ministers the direction in which the EC intends to steer future automotive policy:

• Reduction of administrative burdens: The EC will propose replacing 38 EC directives with corresponding global regulations from the United Nations Economic Commission for Europe (UN/ECE) - for instance, directives on tyres, safety glass, fog lamps and seat belts. By doing so, industry can rely on one single text valid throughout the world. In addition, self-testing and virtual testing will be introduced for 25 directives and UN/ECE regulations to reduce compliance costs and make administrative procedures less costly and time-consuming.
• Reduction of CO2 emissions: The EC strategy is based on an integrated approach, involving not only engine technology, but also technological improvements (such as setting minimum requirements for air-conditioning systems, the compulsory fitting of tyre pressure monitoring systems, setting maximum tyre rolling resistance limits and the use of gear shift indicators) and increased use of biofuels. It also focuses on additional efforts by member states, such as on traffic management, improvement of driver behaviour and infrastructure, and efforts to further reduce CO2 emissions.
• Road safety: The EC believes an effective road safety strategy should be based on a combination of improvement in vehicle technology, road infrastructure, driver behaviour and enforcement. A total of 11 future actions are proposed, including, for example, the mandatory inclusion of electronic stability control and seat belt reminders, and obligatory daytime running lights for new vehicles.
• Trade: The new EC communication proposes to assess the potential of using bilateral trade agreements (particularly in the Asian region) to improve market access and reinforces the need to enforce intellectual property rights globally.
• Research and development: Clean, renewable fuels and vehicles plus intelligent vehicles and roads have been identified as core research priorities. With approximately €20 billion - or about 5% of the industry's turnover - invested in research and product development, the automotive industry is the largest R&D investor in Europe in absolute terms.

The new communication reflects extensive stakeholder consultation and dialogue on automotive issues; the EC hopes that it will contribute to the policy-making culture and methodology in the future.

Together with all relevant stakeholders, the EC will conduct a mid-term review of the recommendations proposed by CARS 21 in the course of 2009 to monitor progress made by individual stakeholders.

Source: European Commission.