How Can
the Regulatory Framework
Help to Improve
the Competitiveness of the
European Automotive Industry?
Ivan Hodac
Secretary General of ACEA
FEBIAC General Assembly
Brussels, 16 June 2005
ACEA: An Overview
ACEA represents the whole
European automotive industry
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13 companies, CEOs members of the Board
24 National Associations as associate members
17 million vehicles produced per year
1.9 million direct jobs
19 billion € in R&D investment
33.5 billion € of net trade contribution
340 billion € of tax revenues
Average car Production per 1.000
inhabitants
2005
100
Výroba vozidel na 1000 obyvatel
90
80
70
60
50
40
30
20
10
0
BEL
CZ
JAP
SPA GER
SK
SLO KOR FRA CND SWE
Země
UK
NL
ITA
POR USA WOR
ACEA Challenges
ACEA represents an industry and a product
that is constantly under the spot in many
areas:
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Environment (emissions, CO2, ELV, noise…)
Safety (e-safety, pedestrian, EuroNCAP…)
Mobility
Intellectual Property (design protection…)
Tax, etc.
This means we are constantly under
pressure and in the public arena
ACEA Achievements
The European Industry has made significant
achievements towards sustainable mobility and
is fulfilling its societal responsibilities:
Reductions in emissions / CO2
Reductions in noise (by 90% since 1970)
Recyclability of cars (almost 95%)
Active and passive safety (belts, ABS, ESP, airbags, …)
e-Safety
Mobility (navigation systems, RTTI)
We should speak up about all these achievements!
Economic Situation of the MV Industry
The competitive development of the European
automotive industry depends on a strong and
profitable home market, requesting high market
acceptance of its products!
Growth on third markets
Profitable Home Market
Market acceptance
A strong home market is crucial for the industry to:
Enhance Europe as a high volume and profitable automobile
production location;
Safeguard jobs at stake;
Enhance Europe’s potential in the field of R&D and
technological innovation.
Economic Situation of the MV Industry
Today, the European market constitutes the most competitive and at
the same time the least profitable market in the world!
Estimated Operating Margin by Region 1991 and 2002
1991
2002
Asia
N. America
Europe
-3,0% -2,0% -1,0% 0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0% 7,0%
Source: Eurostat
HICP: Harmonised Index of Consumer Prices
Source: Deutsche Bank
Economic Situation of the MV Industry
ACEA members have lost market shares in their
home market to the benefit of Japanese and
Korean makers
ACEA
JAPAN
KOREA
Source: ACEA
1990
1995
2000
2003
2004
88,1%
11,8%
0,1%
87,8%
10,7%
1,5%
85,2%
11,4%
3,4%
84,0%
12,7%
3,3%
83,2%
13,1%
3,3%
The Issue of Competitiveness
The EU Commission has officially recognized in its
European Competitiveness Report of 2004 that it
exists a link between the Regulatory Framework and
Competitiveness:
“Clearly, the competitiveness of the automotive industry
depends on a coherent and cost-effective regulatory
framework […]
Progress is still to be made in reducing regulatory
complexity and in designing regulations so as to meet
their goals while taking into account possible conflicts
between regulations, their cumulative impact and their
external aspects”
Factors affecting the Competitiveness of the Industry
The Regulatory Burden: A comparison with the US
EU has a higher number of automotive regulations
EU has not a completed internal market
EU has higher regulatory stringency and demands
for the automotive industry
EU has shorter lead times than the US
EU has higher bureaucracy and red tape
EU has a lower economic growth
EU automotive market is less profitable
Factors affecting the Competitiveness of the Industry
The regulatory burden
Industry performance suffers from numerous and often un-coordinated
and unbalanced EU regulations, that are interpreted and implemented
differently in the various Member States!
Incoherency of EU legal requirements:
250
150
Ex.1 : Fuel efficiency versus NOx emissions
Ex.2: Safety requirements versus CO2 emissions
EU directives & regulations concerning vehicles
Ex.3: Pedestrian safety versus industrial
design protection and CO2 reductions
Amendments to these EU directives & regulations
Consequences:
- Regulatory density increases the costs of
doing business in Europe!
100
50
0
19
67
19
69
19
71
19
73
19
75
19
77
19
79
19
81
19
83
19
85
19
87
19
89
19
91
19
93
19
95
19
97
19
99
20
01
Number
200
EU directives & regulations
concerning vehicles
- Budget is devoted to meet new regulatory
requirements (and updates) rather than to
more competitiveness-orientated investments
(R&D,…)
- Cumulative cost resulting from legislative
pressure
Factors Affecting the Competitiveness of the Industry
The Regulatory Issues
Unfavourable market acceptance of EU legislation
Customers are not willing to pay for features which are not
for their direct interest: environment, recycling, pedestrian
safety (ex.: low success of the green models of several
B-cars in EU)
Introduction of non-technical legislation which has or
will reduce the profitability of the industry:
Design protection of spare parts, distribution system,
warranty
New policy of the Commission to promote ratings,
labels or transport policies which will add costs to
the vehicle or its use
(Euro-NCAP, green purchasing, road pricing,…)
CARS 21
In January 2005, the Commission has launched
CARS 21, an innovative initiative to address
competitiveness of the automotive sector:
HLG composed of EU Commissioners, MEPs, National
Ministers, Industry (auto, suppliers, oil), NGOs, Trade
Unions and Motorists
Meetings throughout 2005, leading to a final report with
recommendations to improve competitiveness, reduce costs
and avoid cumulative effects of regulation, draft a new
regulatory framework for the next 10 years
Focus on: Competitiveness, better Regulation,
Environment, Safety
CARS 21 is a recognition by decision-makers that
regulatory issues do affect competitiveness
CARS 21
ACEA Priorities (Horizontal)
Define an efficient and competitive automotive
policy process and framework
Support the full and rapid completion of the
Internal Market
Promote an efficient R&D and innovation
framework
Promote an efficient European Transport Policy
Promote a dynamic trade and investment
environment in third countries
Reinforce the Competitiveness Council so that it can
more effectively and coherently fulfil its mandate
CARS 21
ACEA Priorities (Vertical)
CO2 emission reductions
(incl. Integrated approach)
Future legislation on emission standards
(PCs and CVs)
Safety
(incl. integrated approach)
Design protection for visible spare parts
Taxation
WVTA Framework Directive for CVs
Example: Design Protection
The proposal to abolish design protection rights
on visible spare parts, adopted by the EU
Commission in September 2004, is a good
example of « bad regulation »:
No proper impact assessment done and
little consultation with the industry
No respect of review procedures contained in
previous legislation
Inconsistent with EU overall policy on
intellectual property
No proven price benefits for consumers
Open door to quality and safety issues
(compliance with pedestrian protection rules?)
A 2,5 billion Euro present for parts producers outside
the EU
Example: Digital Tachographs
The date of entry into service of Digital Tachographs
(5 August 2005) has been confirmed, but Member
States and suppliers are not ready:
 National legislation not in place in 12 MS
 Tachographs Cards not in place in 15 MS
 Workshop Authorisation not in place in any MS
 Enforcement Agencies not in place in 17 MS
 3 out of 4 digital tachograph producers have still
not started deliveries
To date the EU Commission has taken no steps to
clarify the situation, despite an EP vote calling for
a moratorium.
Commission must have the means and the will to
correct such a situation!
Example: CO2 Reductions
So far, CO2 reductions have been achieved
exclusively through technological measures put in
place by manufacturers, while significant and less
costly progress could be made through an
integrated approach comprising:
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Vehicle
Infrastructure
Driver
Other Stakeholders
Situation is similar for Road Safety !
Example: China
China is becoming an increasingly important market
in the global automotive scene. European
manufacturers play a key role in China, but
are faced with a number of specific issues:
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Chinese Compulsory Certification
Joint-Ventures
Local Content
Emissions
Intellectual Property Rights
This penalizes access to Chinese market.
Support from the Commission is needed.
ACEA Better Regulation Principles
Prioritazion and coordination of EU policies
Proper IA methodology and processes
Proper and timely consultation of the industry
Holistic approach to legislation
Technology neutrality
Split-level approach
Art. 95 as legal basis
Global harmonisation of technical rules
Sufficient lead-time
Simplification of EU legislation
ACEA Three Pillars Approach
Better Regulation
Pending Legislation
Develop better
Regulation principles
on which to base
effective EU
automotive policy
(incl. review of
regulatory process)
Review, applying
better Regulation
principles, pending
legislation proposals
Reduce cost of
legislation
Future Legislation
Apply better
Regulation principles
& pro-competitive
regulatory process
to all future
legislation
Put on hold any
legislation proposal
not respecting these
principles
Conclusions
CARS 21 is the first test case for a new, holistic
approach to sectorial regulation
Competitiveness must becomes a guiding principle
of EU industrial policy and must be translated into
concrete actions !
Cars need to remain affordable !
The EU needs to take into account the global dimension
of the automotive market and its future challenges
(China, India)
Only a competitive and healthy automotive industry
can continue to prosper and innovate, and to contribute
to European economies and sustainable mobility !