WRITTEN QUESTION E-3707/97 by Ulf Holm (V) to the Commission (19 November 1997)

Subject: EU subsidies to the auto industry

According to the press, the EU is giving the car manufacturer, Jaguar, some 1 billion kronor in subsidies for the further development of a Jaguar model. The car will cost some 1 million kronor on the market. According to Commission President Santer's chief press officer, Colin Cook, the subsidy is to help them get a foothold in the segment currently occupied by the BMW 5-series. Jaguar cars are widely recognized as luxury vehicles with heavy fuel consumption.

1. To which other car manufacturers does the EU give financial support and how much?

2. Does the Commission consider it appropriate to subsidize the development of a luxury car that the absolute majority of EU citizens will never be able to buy?

3. Does the Commission consider that subsidies for the development of fuel-guzzling cars such as Jaguars can continue once the Amsterdam Treaty is in force in view of the fact that 'sustainable development' is now written into the Treaty and will be a significant criterion in EU policy?

Answer given by Mr Van Miert on behalf of the Commission (21 January 1998)

The Honourable Member refers to information in the press according to which the Community is granting SEK 1 billion (MECU 116) to Jaguar Cars for the development of a new model. It is understood that by this information, reference is made to a package of financial assistance notified to the Commission by the British authorities in favour of the investment for the Jaguar X-200 range of cars.

The Commission has scrutinized the proposed aid package and has concluded that it conforms with the rules laid down in the Articles 92 and 93 of the Treaty and, in particular, with the special framework ((OJ 123, 18.5.1989 and OJ C 284, 28.10.1995 (latest review).)) applicable in the automobile industry. It was confirmed that the proposed aid measures fulfil the eligibility criteria for regional, training and environmental aid. Furthermore, it was concluded that the regional benefits arising from the investments in terms of job creation, an up-grade of the personnel's skills and the attainment of enhanced air quality outweigh the possible negative impact of the aid measures on competition. The total support of GBP 80 million (MECU 116) mentioned in the press also encompasses measures not yet defined GBP 8.3 million (12 MECU) or which do not benefit directly Jaguar GBP 3.8 million (5.5 MECU), as they are granted in the context of a programme where Jaguar only acts as a service provider.

The total financial assistance approved ((The decision adopted on 27 March 1996, OJ C 311, 22.10.1996.)) by the Commission in favour of the X-200 project amounts to GBP 67.5 million (98 MECU), of which GBP 65.75 million (95.5 MECU) is to be paid solely by the British authorities. As regards the Community funding, it would appear that on the basis of the information which is currently available to the Commission, a contribution of GBP 1.75 million (2.5 MECU) has been awarded for activities from which Jaguar's X-200 project would benefit, i.e. the creation of a waste effluent plant (GBP 1.5 million, 2.2 MECU) and improvements of boundary walls of the site (GBP 0.25 million, ECU 360 000). This grant was part of the assistance given to a project called the Bromford area package project, financed under Measure 3.3 (Creating the infrastructure required to assist diversification and new growth) of the West Midlands objective 2 single programming document (SPD) 1994-1996.

With regard to the specific questions raised by the Honourable Member, the Commission wishes to point out the following:

1. The Commission is collecting the information it needs to answer the question.

2. This is not a criterion which the Commission would follow in assessing the eligibility for either state aid or in granting contributions from the structural funds.

3. The Community has a strategy to reduce the average carbon dioxide (CO2) emissions of newly registered passenger cars. Its objective is to attain an average CO2 emission figure for new cars of 120 grams per kilometer by 2005 (or, if this target should not be fully achievable by that date, by 2010 at the latest). The Commission considers this target to be ambitious. The Honourable Member is kindly requested to note that the CO2 objective is expressed as an average figure, which means that cars with a higher fuel consumption would not be excluded from the market. At the same time, cars with a better fuel economy should be introduced into the market so that the overall objective is met.