Insights/Case studies/Newsroom/CareersCareersCareersPartnersConsultantsTechnology innovationCorporateEarly careersSearch Jobs/About us/Contact us Global locations

Search paconsulting.com
  • Phone
  • Contact us
  • Locations
  • Search
  • Menu

Share

  • Add this article to your LinkedIn page
  • Add this article to your Twitter feed
  • Add this article to your Facebook page
  • Email this article
  • View or print a PDF of this page
  • Share further
  • Add this article to your Pinterest board
  • Add this article to your Google page
  • Share this article on Reddit
  • Share this article on StumbleUpon
  • Bookmark this page
.
 
Close this video

VW, BMW and Fiat face big fines over CO₂ targets

peter Campbell | financial times | 22 September 2017

Some of the world's biggest carmakers are heading for fines in excess of €1bn as they fail to hit legally mandated CO₂ targets in 2021.

Volkswagen, BMW and Fiat Chrysler are among groups facing fines as falling diesel sales and rising consumer appetite for large sport utility vehicles make the targets tougher to meet, according to forecasts by PA Consulting.

In total, seven out of 11 carmakers are on course to miss the targets, the report states.

Only Volvo, Toyota, the Renault-Nissan Alliance and Jaguar Land Rover are on track to meet the requirements, says the consulting group, which advises many of the manufacturers in the car industry.

Under the targets, carmakers must reduce the average emissions of the cars they sell to below 95g of CO₂ per km.

Carmakers that miss their targets face stiff penalties, with a fine of €95 for every gram of CO₂ above the limit, multiplied by the number of cars they sell in 2020.

This would leave VW facing a €1.7bn fine and BMW facing a €600m penalty, the PA Consulting report predicts.

Each company has its own individual target, which takes into account the types of vehicles sold, meaning that a company with smaller average vehicles will face more stringent targets than a group focused mainly on large cars.

Under the system, carmakers also receive "super-credits" for every fully electric car they sell, allowing them to offset the impact of more polluting vehicles.

Diesel cars have typically been a key component for manufacturers to meet their targets because they emit about a fifth less CO₂ than petrol equivalents.

But a political backlash against the fuel, which has seen it criticised by politicians and banned in several major cities from Stuttgart to Paris, has seen a fall in diesel sales accelerate this year.

Diesel's market share in Europe has fallen from 52 per cent in October 2015 to 45 per cent in May 2017.

"The combination of SUVs and rapid decline of diesel cars adds complexity and difficulty and will increase the challenge that companies face," said Thomas Goettle, global head of automotive at PA Consulting.

CO2 report front cover

As a result of the shift, some of Europe's biggest carmakers are less likely to hit their targets than a year ago, the report claims, because a higher percentage of their fleet will be powered by petrol.

Volkswagen, which owns the Audi and Porsche brands, and BMW have both been pushed back by falling diesel sales, says the report.

Frank Witter, chief finance officer at Volkswagen, has previously said the costs of complying with the CO₂ targets are the biggest pressure on the group's R&D budget, calling it the "overarching issue" for the company.

He added: "The other items, investing and developing new technologies, autonomous driving, connectivity, electrification, are certainly important, but the most critical one is CO₂ compliance."

BMW chief executive Harald Krueger has told the Financial Times that diesel was required by the company to hit its 2021 targets.

"It's getting more challenging because the reduction in diesel needs to be compensated," he said at the Frankfurt Motor Show.

"But we need diesel to fulfil the targets. That's very clear."

Find out more about our work in manufacturing.

By using this website, you accept the use of cookies. For more information on how to manage cookies, please read our privacy policy.

×