The new emission norms imposed by the European Union since 2000 are stifling the European car industry and playing into the hands of Chinese brands, Hungarian news and opinion site Mandiner writes in a new analysis.
According to the car price database of Germany’s leading automotive magazine Autobild, the base price of the most recent VW Golf Mk8 series has exceeded €20,000, while Mk7 prices started at €17,800; Mk6 at €17,000; Mk5 at €15,500; and Mk4 at €14,900. The increase for the current generation was the steepest yet, even accounting for inflation.
In its annual report, German automotive data supplier DAT states that German car prices have jumped 90 percent in the last 25 years; meanwhile, salaries have grown by only 60 percent. The average car price in Germany rose by 8.2 percent to more than €36,000, while an average new car in Germany cost €30,000 in 2016 and €27,000 in 2012.
Most of the rise was due to the higher manufacturing costs of engines and catalysts to meet ever-stricter emission regulations. The 2015 emission scandal of Volkswagen where the auto manufacturer was found to have manipulated emissions during testing did not help matters. In that case, VW vehicles contained software that was able to detect it was in test mode and dialed back engine performance, which, in real life, was significantly higher. This led authorities conducting tests on the car to believe that emissions were far lower than they were in reality, leading regulators to hit VW with massive fines.
The European Commission is already working on the stricter Euro 7 emission standard, which is expected to enter into force in 2025 and would unify the standards for diesel and gasoline engines, reducing carbon monoxide emissions to 0.1-1.0 grams per kilometer and nitrogen oxide emissions to 0.03 grams per kilometer. It would also permit a smaller difference between what vehicles produce on emissions tests in the laboratory and what they produce on in the real world.
German industry is fighting back
Whether the EU’s efforts to tighten standards means a total ban on internal combustion engines in practice is a battle that will have to be fought by the car industry this year. As of now, it looks like automakers will still be allowed to produce gas and diesel engines after 2025. In a press release issued on April 8, Hildegard Müller, president of the German Automobile Manufacturers Association (VDA), said that the recent draft of the Euro 7 standard shows that “the European Commission accepts the limits of technical feasibility and has said goodbye to unattainable goals”.
There is, however, another “sword of Damocles” hanging above the German car industry, the so-called “fleet average”. In practice, this regulates the average emission of all cars — gas, diesel, hybrid and electric — sold by a manufacturer, which must meet a certain threshold.
The planned EU regulation would require carmakers to achieve a ratio of 15 percent zero-emission cars by 2025 and 25 percent by 2030. In light of this, some German carmakers — notably Audi and Mercedes-Benz — have already announced they will discontinue the development of new internal combustion engines.
However, other European carmakers, in order to keep their existing combustion engine lines running, are increasingly turning toward China. While in 2013, the Chinese market accounted for 28.3 percent of global car sales, its share rose to 35.4 percent last year. Meanwhile, German brands, facing the inevitable switch to electric cars, are asking regulators to do something about the lack of charging stations. BMW President Oliver Zipse reminded Executive Vice-President of the European Commission Frans Timmermans that the pace of electric car production is currently four times faster than that of building up the necessary infrastructure of charging bases. Lacking these vital charging stations, internal combustion engines will remain the only viable alternative for years to come.
