Car manufacturers are going through tough times. Not least because growing public concern about climate change is increasing regulatory action. One of the clearest signs of this change is the European Union’s 2021 CO₂ emissions targets, which, our latest research shows, is set to impose €14.5bn fines on Europe’s top 13 car makers.
This is the fifth year we’ve assessed progress towards the targets and, after positive results in recent years, many manufacturers have taken a step backwards and all now look likely to miss them.
While a few top performers could turn the tide and avoid fines by prioritising low-emission vehicles, most must now take aggressive action to prepare for the 2025 and 2030 EU CO₂ emissions targets.
All the car makers that were previously on track to meet their targets (Toyota, Renault-Nissan-Mitsubishi (RNM), Volvo, Honda and Jaguar Land Rover (JLR)) are now set to fall short according to our forecasts. Still, Toyota remains at the top of the table, while Peugeot-Citroen has moved from fifth to second, replacing RNM, which slipped to third.
Some companies are likely to face significant fines. Volkswagen faces a potential penalty of €4.5 billion (32 per cent of its earnings 2018), reflecting the high number of cars it sells in Europe. And JLR could see a fine equivalent to 400 per cent of its 2018 profit.
Ranking per average CO₂ (g/km) emission 2021:
|Rank||Car maker||2021 Target||2021 Prediction|
|2||Peugeot Citroen (PSA)||91.6||95.6|
Please visit this web page on a desktop computer or tablet device to view the above table as an interactive dashboard.
|On target||Close to target||Off target|
Our unique method of benchmarking examines manufacturers’ performance against their specific targets, forecasting the gap they will need to close by 2021. We arrive at our forecasts by assessing each car maker’s ability to reduce average emissions through a range of initiatives. We also forecast the registrations for each type of car (diesel, petrol, hybrids and battery electric) to determine the sales portfolio of lower emission vehicles. And we looked at sales by vehicle segment. Based on this data, we develop our forecasts of average CO₂ emissions (g/km) in 2021.
Our analysis shows it’s too late for changes in technology to make a difference to the 2021 targets, so manufacturers will have to take a different strategy to make an immediate impact. But the new low-emission technologies they are developing have real potential to reduce CO₂ emissions as focus shifts to 2025 and 2030 EU CO₂ emissions targets.
Manufacturers should look closely at how they can encourage sales of low-emission vehicles throughout 2020 as electric vehicles and plug-in hybrids qualify for super-credits that could significantly lower fines. That means reviewing pricing and promotions, and making low-emission vehicles more prominent in showrooms.
Car makers should accelerate innovative technologies to market as a standard option, foregoing the long process of introducing premium technology that trickles down through the range. At the same time, they should explore partnerships with other car makers and the supply chain to manage costs and develop open platforms that make electric technology more available.
Car subscription schemes that only use low-emission vehicles could also shift customers towards eco-friendly cars. We’re seeing more people across Europe look to ‘transport-as-a-service’, where they rent cars when they need them rather than buy them.
Only by increasing sales of low-emission vehicles can car makers move towards their targets and reduce fines. That means understanding sales volumes by CO₂ emissions, heavily marketing hybrids and fully electrified vehicles, and thinking carefully about price. While the disruption and uncertainty caused by technological change have been difficult for the automotive industry, technology will be the long-term solution to reducing emissions and costs.