Automakers could be hit with billions of euros in fines for missing the European Union’s fleet CO2 emissions reduction target that starts to take effect next year. That is the conclusion of analysts after CO2 emissions rose to their highest level since 2014.
The estimated total penalty payment is 34 billion euros, according to a report this month from JATO Dynamics, which based its figure on CO2 data from last year. Volkswagen Group and PSA Group, the two largest automakers by volume in Europe, could face the loss of up to half of their combined net profits, JATO said.
The fine is 95 euros per gram of CO2 over the limit, multiplied by the number of cars sold in 2020 and 2021, although 5 percent of the highest-emissions vehicles will not be counted in 2020. The fleet CO2 target is 95 grams per kilometer.
13 Nov, 2019 12:56pm
We've always recommended that buying towards the end of a month – or even better, the end of a quarter – could prove fruitful. Dealers are more likely to hand over a larger proportion of their profit margins to buyers who help them hit their end-of-period sales targets, which bring lucrative bonuses with them.
But in the weird and wonderful times we currently live in, there’s an added incentive for car makers and their dealers to shift stock before the end of 2019. And a hitherto unseen desperation to do so, with massive financial backing that’s playing into the hands of buyers.
Next year a new European Commission regulation comes into force that means all car makers have a fleet-wide average emission target for new cars of 95g/km of CO2. Failing to hit that average will result in big fines.
As usual, there are horribly complex calculations involved, but the bottom line is that every car maker needs to sell more cars that emit lower levels of CO2 than they do cars with higher levels of emissions.
It also means that ultra-low CO2 cars – either pure-electric or plug-in hybrid models that emit less than 50g/km of CO2 – are in effect worth double towards the CO2 target in 2020. Expect them to be marketed hard next year – much more than they have been in 2019.
What this means is that, in the remaining weeks of the year, car makers will be desperate to sell you a car that, if left unsold until 2020, could cost them dearly when it comes to calculating that average CO2 figure. They’d rather take this pain now than even more pain next year.
One senior industry figure told me that he – and his counterparts at other manufacturers – have millions to spend persuading people to buy these cars in 2019. And among the companies with the most to spend are some of the premium brands you wouldn’t expect.
The clock is ticking, the deals are getting better and better. If you’re going to buy in 2019, leave it as late as you dare.
Glad GM have pulled the plug on Europe, it going to be impossible to make a decent profit on hybrid & electric cars and poor old Ford could be hit with $1 billion in UK Brexit WTO tariffs, VW & PSA will pay a lot. Massive unemployment in the auto industry coming to Europe EV's have less components that are normally made in some cheap overseas location will only use half the numbers of auto workers to assemble the cars.
Sounds like a happy 2019 Christmas and a crappy new year for automakers in Europe in 2020.