Global Economics

Carmakers Ask EU for $55 Billion Loan


European carmakers are asking for a loan to help them compete with the U.S., where the government has announced a car sector support package

European car manufacturers have agreed to ask the EU for a €40 billion loan to maintain a "level playing field" with the US, while bashing European plans to pass tough new laws on car engine CO2 emissions.

The Brussels-based European Automobile Manufacturers Association (ACEA)mdash;which represents 15 major producers including VW, BMW, Renault and Fiatmdash;put together the bid at a board meeting on Friday (3 October), after the US government announced a $25 billion support package for its car sector last week.

"It would be absolutely necessary that the European Commission do exactly the same thing. It was $25 billion for the US, in our case it's €40 billion because we have twice the capacity. We need a level playing field," Fiat CEO Sergio Marchionne told Bloomberg.

"We're trying to deal with proposals on the regulatory framework which don't make a lot of sense given where we are,'' he added on the new CO2 laws. "We need to have a much more proactive, a much more intelligent approach coming out of the European Commission.''

"Other governments should take inspiration from this. Why only in the US? The European Commission should perhaps do the same," Renault CEO Carlos Ghosn said.

"On the one hand, the industry is hurting from the credit crisis. On the other hand, the industry is facing the prospect that complying with the new legislation on emissions is going to cost a lot of money," ACEA secretary general Ivan Hodac told the International Herald Tribune.

Mr Hodac said ACEA members saw new car registrations drop by 15.6 percent in August compared to last year, while estimating the new CO2 legislation will cost the industry €25 billion while consumers will pay €1,500 extra per car.

Tactical timing

The ACEA alarm bell comes as time is running out for the automotive sector to influence a new EU law on car engine emissions.

The European Parliament's environment committee in September voted that new cars sold after 2012 should produce no more than 130g of CO2/km on average compared to 158g/km today.

Political group leaders will this week internally debate if the environment committee proposal should form the parliament's last word on the matter before starting a "trialogue" negotiation with the commission and member states.

The environment committee's targets are likely to face stiff opposition from German MEPs across party lines, as German firms typically produce heavier, more-polluting cars than French and Italian competitors.

But if the MEPs go for the swift trialogue option, the legislation could still be approved by a plenary vote in the last session of the year, with the French EU presidency keen to notch up the landmark bill as one of its successes at the EU helm.

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