Automotive News Europe - January 2020 - 7

AUTOMOTIVE NEWS EUROPE

COVER STORY

New CO2 rules cloud
2020 sales outlook

little improvement." Ellinghorst and his
colleagues at ISI say the risks of fines
are very real. "The current CO2 performance is simply not good enough and
we continue to flag that carmakers run
the risk of facing considerable fines if
more is not done," he said.
Marcus Winkler, head of global group automotive sector at Capgemini, said that
automakers may have been too slow to
bring electric cars and plug-in hybrids to
market. "It's already quite late," Winkler
said. "In my original assumptions about
2020 we would have had more choices,
more cars that the consumer can buy,"
he said. "So even if you order an electric
car now, it will take four or five months
until you get it."
But the lack of progress on CO2 emissions might be strategic, argued Al
Bedwell, who is director of global powertrain forecasting at LMC Automotive.
"We shouldn't be surprised that the CO2
trend has not yet started to move in a
positive direction for many automakers,"
he said in a note. "There is no incentive
for automakers to start selling their
most fuel-efficient products before January," especially those that may be less
profitable, such as plug-in hybrids, than
conventional internal combustion cars.
For automakers operating in Europe,
convincing consumers to buy cars that
they have shunned in the past is a bit
like playing chess in three dimensions:
There are many moves they can make,
whether in sales, marketing, production
and even registration. On top of that are
national incentive programs that vary
widely from country to country.

Cautiously confident
In interviews with Automotive News
Europe this autumn, top executives at
brands that are sold in Europe were mostly confident that they would not be paying
any emissions fines. But they expressed
a bit of uncertainty as to how the overall
market would reach its target.
"We are preparing to supply electric vehicles in sufficient volume and to deliver
them without long delivery times to our
customers," said Thomas Schmidt, the

JANUARY 2020

head of Hyundai's European operations.
"However, everyone has to sell many more
battery-electric vehicles. That raises some
questions: Does the European market have
that many customers who want to buy a
full-electric car? How long will it take for
the national governments to put in place a
strategy to roll out a sufficient number of
charging stations?" Hyundai's low-emissions lineup includes the Ioniq compact
sedan, in electric or plug-in versions and
the Kona small SUV in an electric version.
PSA Group CEO Carlos Tavares has been
adamant that none of his company's
brands, including Peugeot, Citroen, Opel
and DS, will be liable for any emissions
fines. "For us, it's an ethical and not just
a financial matter" to meet CO2 targets,
he told ANE. He did not offer any details,
however, on how the brands would meet
a target of 7 percent of sales of electric
and plug-in hybrid vehicles.
"We have a very precise process -- I can't
say a lot about it because it's highly competitive -- that involves our production, our
order book, and making our dealers actors
in what we are doing, not just followers,"
Tavares said. PSA has just started a big
push into electrification, with electric versions of the Peugeot 208 small hatchback
and 2008 small SUV, the Opel/Vauxhall
Corsa small hatchback and the DS 3 Crossback small SUV about to go on sale. Plug-in
models include the Peugeot 3008, Opel/
Vauxhall Grandland and DS 7 Crossback
compact SUVs, and the Peugeot 508 midsize sedan and station wagon.
Peugeot brand CEO Jean-Philippe Imparato said his brand had been preparing
for the changeover by "monitoring every
high-emissions car that is in stock" or in
the dealer network. "I don't know how
other automakers will manage their operations," he told ANE, "but we will be
compliant in January."
But not every executive is so confident
about avoiding fines. Michael Jost, chief
strategist at Volkswagen Group -- which
faced issues in 2018 meeting deadlines
for the new Worldwide harmonized Light
vehicle Test Procedure, or WLTP - said,
"Next year and 2021 might be challenging
since we will be ramping up our EV models," including the highly anticipated ID3

"Uncertainty" was the watchword for European sales going into 2019, and that will
again be the case in 2020, executives and
analysts say. Last year, caution centered
on Brexit, tariffs and the lingering effects
of the Worldwide harmonized Light vehicle
Testing Procedure (WLTP). None of those
factors have completely disappeared, but
the big unknown is how buyers will react
to a wave of electrified vehicles needed to
meet new EU emissions rules.
"I think that 2020 will be a very interesting
year, because we will see if the consumers
are ready to buy [electric vehicles], if the
infrastructure that's needed is in place, if
the different use cases are working," Faurecia
CEO Patrick Koller said. "We will see."
Peugeot CEO Jean-Philippe Imparato
warned of turbulence at the end of 2019
and the beginning of 2020, as automakers
go from average fleet CO2 emissions of
about 120 gram per kilometer at the start
of 2019 to 95g/km, the new EU standard,
on Jan. 1. To count as a 2019 sale, cars
had to have been registered before that
date. Overall sales will be "stable" in 2020,
Imparato told Automotive News Europe,
but he expects there to be a "seasonal
effect" on first-quarter demand because
of the tougher emissions regulations. "I'm
not sure all the automakers are ready for
them," he said of the new targets, which
will apply to 95 percent of all vehicles
sold in 2020 and 100 percent of those
sold next year. "If you are not ready now
in terms of product, production and stock
management, you will be dead in January."

Decline expected
A four-year post-recession run of sales
growth slowed to a halt in 2018, with the
European market slipping into negative
territory, down by 0.04 percent, and the
Western European market down by 0.7
percent. Final figures for 2019 were not
available at press time, but the overall
market is expected to be flat.
For next year, analysts are predicting
that European sales will fall somewhat.
LMC Automotive is forecasting a decline
of 1 percent in Western Europe in 2020.
Jonathon Poskitt of LMC said in a note: "We
are now a little more cautious on 2020, with
overall volumes expected to be lower than
this year. Economic challenges remain,
particularly in light of the external trade
environment and Brexit uncertainty." He
added that there is a risk that automakers
may have to take action that could have an
effect on total market volumes because of
forthcoming CO2 targets.

Continued on Page 8 

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