Europes Future Auto Industry

The Commission has pledged up to €80 billion in research, development and innovation funding for the automotive industry.

It also plans to launch a consultation on a post-2020 policy for controlling CO2 emissions for passenger cars and light commercial vehicles.

These are among the main promises contained in a new Action Plan for the EU automotive industry in 2020.

This sector is hugely important to the European economy. It is one of the biggest industries in Europe, with more than €700 billion in turnover and has a knock-on effect on other sectors such as steel, chemicals and textiles.

The Action Plan

The Action Plan is the first deliverable of the New European Industrial Policy, outlined in the Commission's October 2012 Communication. It sets out ways to strengthen the competitiveness and sustainability of Europe’s automotive industry.

It also builds on the final report of the Cars 21 High Level Group, which was published in June 2012 and sets out key recommendations for the automotive sector.

Four strategic actions up to 2020 have been identified:
• Investment in advanced technologies and innovation
• Improvement of market conditions
• Enhancement of competitiveness on global markets 
• Anticipation of adaptation
The Action Plan aims to tackle the negative impacts of the ongoing economic crisis and future challenges in the automotive industry. These are production, trade, climate and consumer oriented.

1. Investing in technology 

The Commission says that research resources need to be increased in order to strengthen the competitiveness of the European car industry, and to maintain its technological leadership.

The European Green Cars Initiative Public-Private Partnership (EGCI PPP) and European Investment Bank (EIB) loans represent the main instruments for research, development and innovation (RDI) in the cars sector.

The Commission has proposed the following:
• RDI funding for 2014-2020 under Horizon 2020 framework that amounts to €80 billion
• A Competitiveness of Enterprises and SMEs (COSME) Programme with a budget of €2 billion for 2014-2020
• A European Transport Technology Strategy that focuses on deployment of innovative technologies in critical areas of transport
• A Strategic Energy Technology Plan that addresses RDI into strategic fields in the transport sector
Financing should be done by way of creating Public-Private Partnership (PPP) to provide the most synergies. Under the framework of Knowledge and Innovation Communities (KICs), cooperation between the industry and European Institute of Innovation and Technology (EIT) should be further explored. The Commission will develop a proposal on European Green Vehicles Initiatives (follow up to EGCI PPP).

Access to finance

In order to meet the 2020 fuel–efficiency targets, the EIB has significantly increased its investments in RDI in the automotive industry from €2 billion a year to €14 billion in 2009-2010, and will continue this trend.

The Commission will also continue working with the EIB to ensure that RDI financing for the automotive industry is available, and will facilitate access to financing for SMEs. This is especially important in cases where accessing credit from commercial banks is proving difficult. The Commission will also explore the financing possibilities linked to electro-mobility.

Lowering CO2 emissions

The Commission recently adopted proposals to implement 2020 CO2 targets for cars and vans and will start a public consultation for the targets beyond 2020. These targets will be included in a wider and integrated policy response to CO2 reductions.

The Commission will also review Directive 96/53/EC beginning 2013 to allow for fuel savings up to 10% through retrofitting existing trucks and aerodynamically redesigning future ones.

Pollutant and noise emissions

The Commission will support the development and implementation of a new driving test cycle and test procedure to measure real driving CO2 emissions (RDE). The new methodology will be included in the EU legal framework before 2014. The new testing should follow real driving conditions. The transition period from old to new testing will be from 2014 to 2017.

The Commission will also propose additional measures to control vehicle pollutant emissions in use before 2014. A new vehicle noise emissions regulation was also proposed in 2011.

Road safety

A new 2020 target of a further reduction of the EU road fatalities by 50% compared to 2010 has been proposed by the Commission. It will continue to implement road safety actions on vehicles, infrastructure and driver behaviour in line with its policy orientations 2011-2020. The Commission will further promote the deployment of the Intelligent Transport System (ITS).

Alternative fuels and infrastructure

As part of its Clean Power for Transport package, the Commission will propose Alternative Fuels Strategy and a legislative proposal on alternative fuel infrastructure in the coming months. Before 2013 it will also propose legislation to ensure EU-wide standardised infrastructure on the recharging interface for electric vehicles.

The Commission will conduct a stakeholder dialogue on fuel labelling scheme as well as monitor the implementation of National Renewable Energy Action Plans, namely the effective biofuel blending rates and the compatibility of fuels around the EU.

2. Improving market conditions

A stronger internal market

By 2013, the Commission aims to set up a stakeholder dialogue to develop work towards common principles on vertical agreements on the distribution of new vehicles. It will also present guidelines for financial incentives for clean vehicles in 2012.

Smart regulation

The Commission will conduct an extensive evaluation of vehicle type-approval framework and it will adopt a proposal to enhance this framework with market surveillance. It will also carry out an in-depth competitiveness proofing exercise for relevant major future initiatives, namely those with a significant impact on the automotive industry.

The Commission will also evaluate some of its implementing acts based on existing vehicle legislation.

3. Enhancing global competitiveness 

Trade Policy

Both trade and industrial policy should be closely coordinated. The Commission will use multilateral and bilateral instruments to remove tariff and non-tariff barriers. This will be done namely under the United Nations Economic Commission for Europe (UNECE) framework with bilateral regulatory cooperation and through Free Trade Agreements (FTAs).

 It will also launch an impact assessment of existing and potential FTAs and presents its study by 2013 at the latest.

International harmonisation

The Commission aims to promote and support further international regulatory harmonisation, namely through 1958 UNECE Agreement reform. It will also contribute to the development of a first proposal for a new Regulation on international whole vehicle type approvals (IWVTA) by November 2013.

Under transatlantic cooperation, the Commission will support the work of two informal working groups on safety and environmental performance of electric vehicles in order to agree a Global Technical Regulation on the safety of electric vehicles by 2014. To this end, the Commission will also enhance international cooperation between standardisers.

4. Anticipating restructuring

 Human capital and skills

The Commission will support the creation of the European Automotive Skills Council in 2013. This brings together national organisations conducting research on skills development and employment in the automotive sector, workers’ and employers’ representatives. Its work will be based on trends in the automotive employment and skills analysis, which will form the basis for recommendations.

The Commission will also promote the use of the European Social Fund (ESF) for workers’ re-training and re-skilling.

Dealing with industrial adjustment

The Commission will continue monitoring restructuring activities vis-à-vis their legal compliance and identify good practice. It will also re-launch the inter-service task force to follow the main plant closures and downsizings. The task force would also streamline the use of EU Funds.

The Commission has also proposed to continue with the European Globalisation Adjustment Fund (EGF) for the period 2014-2010. It encourages the member states to use the EGF and ESF labour flexibility and co-financing schemes.

Monitoring and Governance

In 2013 the Commission will commence CARS 202, a high-level process that will monitor the implementation of CARS 21 recommendations and measures outlined in this Action Plan.

It will also organise ad-hoc expert meetings on competitiveness in the automotive sector.