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Majority of car makers face huge fines for missing CO2 emissions targets

PA Consulting’s forecast of car manufacturers’ performance against mandatory European Union (EU) carbon dioxide (CO2) emissions targets suggests that eight out of 13 car manufacturers will miss their 2021 targets and face significant fines. 

Volkswagen, Ford, Fiat, PSA, BMW, Daimler, Mazda and Hyundai-Kia are predicted to miss their specific 2021 targets. Volkswagen could be fined up to €1.4bn, while PSA faces the biggest impact from fines based on earnings before interest and tax (EBIT)
€600mn, representing 20% of its 2017 profit, according to PA Consulting.

Toyota remains the best performing manufacturer in the ranking, Renault Nissan Mitsubishi lists second and Volvo third (down from second last year). Ford and Volkswagen have gone backwards and are now placed 10th and 11th respectively. 

Daimler and BMW are making progress towards their targets and Jaguar Land Rover still has the highest CO
2 emissions, but is on track to meet its specific target, according to the ranking.

From a regional perspective, Norway still leads the way, seeing a significant reduction on CO
2 emissions from cars. All other European countries lag behind, with CO2 levels staying broadly the same or even increasing since 2015. Germany is one of the worst performing countries, only ahead of Switzerland in the league table. 

 

Michael Schweikl, automotive expert at PA Consulting, says: ‘Car makers are running out of time to improve performance quickly enough to avoid fines. Marketing, sales and pricing strategies that increase the take-up of low emissions vehicles will be key in getting manufacturers closer to the targets.’

The worldwide harmonised light vehicles test procedure (WLTP) cycle will make meeting regulations even harder. The WLTP, which is part of the 2021 regulations, introduces more realistic testing conditions, providing an accurate basis for calculating fuel consumption and CO
2 emissions. It is predicted that it will increase COemissions by an average of 20%.

Schweikl continues: ‘Car makers need to look beyond 2021. The European Parliament voted to introduce rules that would force car makers to lower their 2020 CO
2 emissions targets by 40% by 2030. The final agreement could be closer to a compromise of 35% reduction by 2030 if all EU stakeholders agree on this latest proposition from environment ministers. As such, car makers face a huge change in what they do as they move from the old technology of combustion engines to low emission electric vehicles. While much exciting technological development is already underway, manufacturers cannot underestimate the complexity, cost and cultural change required.’

 

Table 1: How car makers rank on CO2 emissions

 

 

 

Actual data

(g CO2/km)**

(g CO2/km)

(g CO2/km)***

(g CO2/km)

RANK*

CAR MAKER

2016

2017

2021 Target

PA’S 2021 forecast

Deviation 

1

Toyota

105.5

103

95.1

87.1

–8

2

Renault-Nissan-Mitsubishi

111.2

112

94.8

92.1

–2.7

3

Volvo

121.5

124.3

106.7

93.7

–13

4

Honda

126.9

127.3

96.6

95.5

–1.1

5

PSA

110.4

112

93

95.6

2.6

6

Hyundai-Kia

124.7

122

94

96.1

2.1

7

Mazda

127.7

131.2

94.9

98.1

3.2

8

Fiat-Chrysler (FCA)

120

120

91.8

98.5

6.7

9

Ford

120

121

95.4

99.8

4.4

10

Volkswagen

120.4

122

97.7

101.5

3.8

11

BMW

122.9

122

102.4

104.4

2

12

Daimler

125.3

127

102.8

104.6

1.8

13

Jaguar-Land-Rover

150

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