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What coronavirus means for the EU car industry and what we can learn from the 2009 crisis

(Transport and Environment, 20 Mar 2020) As the coronavirus is bringing Europe to a halt, major carmakers and many suppliers - like the rest of the EU economy - are shutting down their factories. The priority now is to ensure the health, safety and job security of the roughly 2.6 million auto workers who are likely to need government support as they are sent into temporary unemployment.

This comes as a huge blow to one of Europe’s most prized industries, but exactly how hard-hit it will be is hard to say at this stage. The main parameter impacting the fate of the car industry is demand for motor vehicles. The shutdown will almost certainly accelerate the recession that was already on its way in early 2020 with car sales down by 7.4% in the first two months. But whether demand collapses or consolidates will depend on how Europe and national governments manage the recovery. 

A speedy economic recovery is clearly carmakers’ absolute top priority as this is what determines whether people will have the resources to buy new cars. However, some carmakers apparently cannot resist the temptation to use the coronavirus crisis to attack environmental regulations. Some are already calling for a delay of the EU car CO2 standards entering force this year. 

Does the corona crisis mean the EU CO2 regulations ought to be scaled back or that fines be waived? 

The first thing to understand is that the car CO2 target, which was agreed in 2008, is a fleet average target. So, falling car sales do not automatically affect compliance. What would impact compliance is if the type of vehicles sold changes. 

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Transport and Environment, 20 Mar 2020: What coronavirus means for the EU car industry and what we can learn from the 2009 crisis