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# 52012DC0636

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS CARS 2020: Action Plan for a competitive and sustainable automotive industry in Europe /\* COM/2012/0636 final \*/**

  

TABLE OF CONTENTS

1........... A
key sector at a crossroads................................................................... 3

2........... CARS
21: A joint strategic vision for the industry in 2020....... 4

3........... A
challenging economic situation....................................................... 6

4........... An
Action Plan to boost competitiveness......................................... 7

4.1........ Investing in advanced
technologies and financing innovation................................... 7

............. Research, development and
innovation............................................................................ 7

............. Access to finance............................................................................................................ 9

............. Lowering CO2 emissions................................................................................................ 9

............. Pollutant and noise emissions......................................................................................... 11

............. Road safety.................................................................................................................. 12

............. Alternative fuels and
infrastructure................................................................................. 13

4.2........ Improving market conditions.................................................................................... 14

............. A stronger internal market............................................................................................. 15

............. Smart regulation............................................................................................................ 16

4.3........ Enhancing competitiveness on
global markets........................................................ 17

............. Trade policy................................................................................................................. 17

............. International harmonisation............................................................................................ 18

4.4........ Anticipating adaptation and
managing restructuring............................................... 19

............. Human capital and skills................................................................................................ 19

............. Dealing with industrial
adjustment.................................................................................. 20

5........... Monitoring
and governance.................................................................. 21

COMMUNICATION
FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN
ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

CARS 2020: Action Plan for a competitive and sustainable automotive
industry in Europe

In the past months, the European automotive industry has
been facing an increasingly difficult period, with the EU market for new
cars declining for the fifth consecutive year. This situation creates a strong
pressure on some companies to restructure their operations, and several
manufacturers have recently announced closures of assembly plants with
consequent job losses. At the same time, however, the European industry continues to face the medium and long-term challenge to
remain a leader in providing future mobility solutions in an extremely
competitive global environment. Therefore, the Commission considers there is an urgent need
to come forward with an Action Plan to support the automotive industry in
facing these challenges.

1.           A key sector at a crossroads

The automotive industry[1] is of
strategic importance to the European economy and its products
and services impact the life of European citizens on a daily basis. The sector represents
around 12 million direct and indirect jobs and delivers a sizeable positive
contribution to the EU trade balance (growing over the last few years and
reaching € 90 billion in 2011). The industry records the biggest private
spending on research and innovation (€ 28 billion in 2009) and is an
essential driver for technological innovation. It is an important multiplier
of growth, due to strong economic linkages with many industrial sectors. These
links are present both upstream, such as with the steel, chemical and textile
industries, as well as downstream, with ICT, repair and mobility services. It produces
most of the vehicles used by citizens for their personal mobility and for the transport
of goods. Therefore, the automotive industry will be a key actor in the new industrial
revolution that aims inter alia at the gradual
substitution of hydrocarbons as the main source of energy and a more efficient
and sustainable use of our resources.

The automotive sector is today at a historic turning point:
the coming decade is expected to lead to important changes in several areas
that are likely to profoundly reshape the industry and its markets worldwide. First
of all, production and trade patterns are shifting. While the European
market is considered mature, several third markets are growing fast, changing
the trade flows and the automotive value chain. The intense competitive
pressure is growing further and EU companies are increasingly being challenged in
their home market, while developing opportunities in third markets. Secondly, the
climate agenda becomes more urgent and even more is expected from
technological progress. To meet long-term greenhouse gas emissions targets as
well as air quality objectives, the internal combustion engine will be further
improved, being accompanied by the development and progressive implementation of
breakthrough technologies, such as electrified propulsion. Sizeable efforts
will also need to be made with the further development and distribution of sustainable
fuels which can be alternatives to traditional diesel and gasoline. At the same
time, road safety remains an important concern.

The automotive sector is one of
the priority action lines where investment in new
technologies and innovation should be facilitated, as is set-out in the
Commission Communication which recently updated the EU Industrial Policy[2]. Giving
further impetus to the EU 2020 objectives of smart, sustainable and inclusive
growth, the Communication calls for a stronger European industry for growth and
economic recovery. The important role of this industrial sector in creating
growth and jobs, also in related services, has been clearly recognised. We must
therefore take a proactive approach.

This Communication presents an
Action Plan for the automotive industry, highlighting the Commission's
commitment to support the sector's competitiveness and sustainability. It is
the first concrete example of the application of our updated vision for industrial
policy in a sectoral setting, i.e. the automotive industry. It defines concrete
policy actions, based on an analysis of the sector carried out by the CARS 21 High
Level Group, which was re-launched in 2010. This Action Plan is articulated
around the following four pillars:

–
Investing in advanced technologies and financing innovation through a range of
regulatory initiatives and support to research and innovation

–
Improving market conditions through a stronger
internal market and the consistent implementation of smart regulation

–
Enhancing competitiveness on global markets through an effective
trade policy and the international harmonisation of vehicle regulations

–
Anticipating adaptation by investing in
human capital and skills and softening the social impacts of restructuring

With this
strategy, the Commission intends to support the active role the automotive
sector will play in seeking to reverse the declining share of industry in
Europe from its current level of around 16% of GDP to as much as 20%
by 2020. The reinforcement of this industry's competitiveness in the EU, the
support in seizing growth opportunities in global markets, as well as the promotion
of clean, safe and efficient vehicles, embedded in an integrated policy
approach will be instrumental to that effect.

2.           CARS
21: A joint strategic vision for the industry in 2020

At the end of 2010, the
Commission decided to re-launch the CARS 21 High Level Group, which was
originally set-up in 2005, as a follow-up of the Commission Communication
"European strategy on clean and energy-efficient vehicles[3]",
adopted on 28 April 2010. The objective of the Group was to make policy
recommendations to support the competitiveness and sustainable growth of the
European automotive industry.

The Group included seven Commissioners,
nine Member State representatives, and a broad and balanced group of
stakeholders (including industry representatives and NGOs), and adopted its Final
Report[4] on 6
June 2012. This Report presents the Group’s consensual view on the strategic
vision for the automotive sector in 2020 and sets out specific recommendations
on a number of relevant policy areas.

The analysis provided in the Report clearly
shows that the status quo for the European automotive industry cannot be
maintained: current production capacities will have to be adapted, new
production methods devised, further sources of raw materials secured and used
more efficiently, and new clusters and business models developed. Just as importantly,
new skills profiles are required and possible changes in employment needs will
have to be tackled. In this context, it is particularly important to ensure a smooth and
balanced economic and social transition via the anticipation of skills and
training needs, as well as managing restructuring in a well prepared way, which
will foster business adaptation and employment transition.

Against this background, the Group has defined a common
view on key characteristics of a strong and competitive automotive industry and
progress towards sustainable mobility for EU society in 2020 as follows:

– An automotive sector which remains of strategic importance and a cornerstone for the EU industry and economy, providing quality employment to millions of workers in the EU; – A sector which is central to many other economic activities while delivering affordable and desirable products, meeting consumer demands, based on a competitive market for automotive products and services, including the aftermarket; – A strong manufacturing base in the EU for road vehicles and components, manufacturing a sizeable part of the vehicles and parts sold on the EU market; – A strong industrial network with a flexible and integrated supply and distribution chain; – A sector exporting a larger portfolio of high-quality and high-technology vehicles to third markets; – Global markets which offer a genuine level playing field to all players in the sector, with fair chances for all technologies, – An automotive industry that is leading in technology, in coordinated action with the fuel supplier industry, producing vehicles which are attractive to EU consumers, clean in terms of regulated pollutants, more fuel-efficient, safe, quiet and connected; – A portfolio of propulsion technologies, dominated by advanced combustion engine technology, though increasingly electrified. In addition, the deployment of vehicles with alternative powertrain concepts (such as electric[5] and fuel cell vehicles) is becoming significant; – Appropriate refilling and recharging infrastructure for alternative fuel vehicles being built, in line with their market potential; – A workforce in both manufacturing, R&D and servicing that is trained and prepared to work with a multitude of technologies.

An integrated policy approach needs to be systematically
put into practice. This approach therefore must include the following elements:

–
private sector and public policy actions at EU, Member State
and regional level that complement each other;

–
measures addressing vehicles to be effectively combined where
appropriate with others focusing on infrastructure and the user;

–
cost-effective regulatory and alternative policy measures which
are effectively implemented and enforced, in order to reach long-term societal
objectives and drive innovation;

–
all policy areas having an impact on the automotive sector to
be closely coordinated among the relevant authorities in charge, including
trade, industrial, environmental, energy, information and communication
technologies, road safety and public health, transport and competition policy,
innovation and internal market, so as to ensure the cost effective achievement
of the policy objectives.

The Commission fully recognises these
challenges and the need of an ambitious industrial policy strategy for the
automotive sector. The Commission will orient its policies to this
objective and calls on other Institutions, public authorities and stakeholders to
follow the same approach, within their respective area of responsibility.

3.           A
challenging economic situation

The CARS 21 Final Report provides a
thorough analysis of the current economic situation of the EU automotive
industry. In the first half of 2012, the situation deteriorated and this
trend is likely to continue until the end of the year. Sales in EU
markets have been declining (6.8% decline for the first half of 2012 for
passenger cars and 10.8% decline for commercial vehicles) - compared to the
already low levels of 2011. The current forecasts indicate a 7.9% year-on-year
decline in the EU market for passenger cars with sales amounting to 12.1 million
units. The EU market for commercial vehicles is expected to decline by 8% this
year, following a previous period of recovery in 2010 and 2011, but remains at
historically low levels. For powered two-wheelers, new registrations are suffering
from the debt crisis and amounted in 2011 to 1.6 million units, which is 40%
below the level of 2007.

Vehicle production
has been in a slightly better shape (assembly of 16 million units of light
duty vehicles, i.e. 1m units more than the 2009 levels) boosted by exports
as demonstrated by a positive trade balance of €45 billion in the first five months
of 2012 (mostly due to exports to the US and emerging markets). There are however
important downside risks to the production levels linked to a slowdown in the
emerging economies. Several manufacturers have reported financial losses on
the EU market mostly due to declining sales combined with the long-standing
structural issue of overcapacity[6].
Some manufacturers have announced significant restructuring actions which will
have repercussions on their supply chain as well as on employment and recovery
prospects in several European regions.

The responsibility
for dealing with the issue of restructuring lies mainly with the industry, but, at the same time, industry is claiming that more coordination
and support at European level is desirable.

This Action
Plan, based on the CARS 21 recommendations, sets long-term goals of keeping the
manufacturing base in Europe, ensuring competitiveness and sustainability and
constituting a complete industrial policy roadmap for the automotive industry
in 2020.

4.           An
Action Plan to boost competitiveness

The Commission
is planning the following key actions across different EU policy areas:

4.1.        Investing in advanced technologies and financing innovation

In the automotive industry, as in other
sectors, a range of new, clean and safe technologies are being developed, which
are expected to make significant inroads into the market in the coming years.
Starting from a leadership position in today's technology, it is essential that
Europe stays at the forefront by developing tomorrow's solutions, delivering
sustainable mobility. This should be fostered by well-targeted and coordinated
public support for research and innovation, which is fit for the needs of
industry and society, aiming at developing longer term technologies. A holistic
policy approach, complementing regulatory initiatives at the EU, national and
local levels accompanied by infrastructure and demand measures, needs to be
taken to trigger investments in the coming years.

Research, development and innovation

Investment in Research, Development and
Innovation (RDI) ensures competitiveness. Moreover, European financing for RDI
under the 7th Framework Research Programme (FP7) and the loans and
loan guarantees of the European Investment Bank (EIB) aimed at stimulating the
development of clean transport technologies were identified in the CARS 21
Report as key instruments for crisis recovery in 2008-2009, and for tackling
the current competitive pressure in terms of technology leadership.
Importantly, European funds provide a substantial leverage to the EU automotive
industry, which needs to finance simultaneously the RDI on several powertrain
technologies (continuous improvement of combustion engines as well as
development of electric, fuel cells and hybrid powertrains) - in line with the 2020
perspective of a diverse portfolio of fuels necessary to meet the climate
change objectives. Road safety development is another field where there is
still large scope for evidence-based enhancement of vehicle safety. The European
Green Cars Initiative (EGCI) Public-Private Partnership (2009-2013) has been very
positively evaluated by the CARS 21 Final Report as well as the lending
activity of the EIB, especially under the European Clean Transport Facility.
There is a strong consensus that both instruments should continue to be used.

The Commission has:

–
proposed Horizon 2020[7]
as a framework for research and innovation funding for 2014-2020 with a total
budget of € 80 billion – a significant increase in comparison to FP7 – including a commitment to achieve a resource-efficient and
environmentally friendly European transport system. Pending the final decisions
which will be taken in the context of the next Multi Annual Financial
Framework, it is considered that automotive research and innovation funding should
take into account its economic and social importance.

–
proposed the COSME (Competitiveness of Enterprises and
SMEs) Programme[8], with a budget
of € 2.5 billion for the period 2014-2020.

–
proposed that both programmes should
support EU financial instruments that will potentially enable SMEs and larger
firms in the automotive sector to benefit from improved access to debt and
equity finance. Through COSME, automotive SMEs should also be able to benefit
from actions to improve access to markets and through Horizon 2020, to measures
to improve their attractiveness to investors.

–
adopted its Communication on Research and Innovation for
Europe's future mobility[9], proposing the development of a European Transport Technology Strategy. The strategy foresees in 2013-2014 the definition with
stakeholders of technology roadmaps focusing on the deployment of technologies
and innovation in ten critical areas of transport including clean, efficient, safe,
quiet and smart road vehicles. This will help to optimise the contribution of research and
innovation to the ambitious objectives of the White Paper on Transport[10] and support the
implementation of Horizon 2020.

–
started the implementation of the Strategic Energy
Technology Plan (SET Plan) [11] which
addresses the research and innovation agenda of several fields of strategic
importance to the transport sector in particular smart electricity grids,
alternative fuels such as bio-energy and hydrogen and fuel cells as well as
energy storage. In this respect, appropriate linkages will be ensured with the transport
technology strategy.

While Horizon 2020 will provide the general framework for transport
research and innovation, it is of key importance to spell out in more detail
the priorities and operation of financing for research and innovation
development in the automotive industry. Based also on the Report of the CARS 21
Group, the Commission is convinced that financing should cover activities
closer to the market such as public procurement, standardisation and
demonstration activities. The form of PPPs should be favoured as the leanest
and fastest tool and synergies should be sought with national funding.

In addition, potential synergies between the sector and EIT[12] should be further explored, in
particular within the context of the planned future KICs[13] in the areas of added-value
manufacturing and urban mobility.

The Commission will:

–
work together with industry to develop a proposal
on the European Green Vehicles Initiative (as a follow-up to EGCI PPP)
under Horizon 2020, including a platform to develop clean and energy-efficient
vehicle technologies, as announced in the 2010 Industrial Policy Communication[14]. The initiative will leverage private funding to help address the key
challenges proposed for Horizon 2020.

Access to finance

Alongside the European research programme, EIB financing (loans and
loan guarantees) played a key role among the recovery measures for the automotive
sector during the 2008-2009 crisis. By supporting major investments related to
clean technologies, the EIB helps to ensure the competitiveness of the industry
in the years to come. At the time of the previous crisis, the EIB increased its
lending volume to the automotive industry from an average of €2 billion/year to
almost €14 billion for the period 2009-2010. The current loan volumes declined
in 2011 reflecting, among others, better access to finance from the commercial
banks at that time. As companies are completing their research and innovation projects
currently financed by the EIB and new projects appear necessary in order to
reach the 2020 fuel-efficiency targets, the EIB is well equipped in order to
meet this new demand. The recent €10 billion capital increase of the EIB agreed
by the European Council could also be expected to translate into more
opportunities for the automotive sector (for innovation and resource efficiency
in particular).

The Commission will:

–
continue working with the EIB in order to ensure
that financing for automotive research and innovation projects is available
especially in order to meet the 2020 fuel-efficiency targets while maintaining
necessary appraisal procedures to ensure the viability of investments in the
long term.

–
support the EIB in its efforts to facilitate
access for SMEs and mid-caps. Though the administrative burden is
considered to be low, the Commission will further investigate which tools could
improve accessibility to the financing for SMEs, especially if SMEs
experience difficulty accessing credit from commercial banks, once again.
Provision of trade finance or of a global credit line for suppliers in one
country and possibly other options could be explored.

–
explore with the EIB the possibility of financing
projects linked to electro-mobility, including the support through
dedicated technical assistance as with the existing ELENA facility.[15]

Lowering CO2 emissions

Promoting new, less energy intensive
technologies on board vehicles delivering lower CO2 emissions,
deployed in a cost-effective way, will support the creation of added value and
jobs in the automotive industry as well as reduce the EU's energy dependency by
curbing oil imports.

The 2007 EU strategy embraced a
comprehensive approach to reducing CO2 emissions from light-duty
vehicles[16].
This included both demand and supply measures with actions on engine technology
being complemented by other measures, targeting alternative fuels, driver behaviour
and other technological improvements. Also for future policy, as proposed by
the Commission in its recent White Paper on Transport Policy, defining the most
appropriate measures to reduce road transport CO2 emissions in a
holistic way, based on a careful assessment of costs and benefits, addressing as
appropriate vehicle efficiency, the use of vehicles and infrastructure, is
crucial.

Fuel consumption and emissions can also be
substantially reduced through large scale deployment of more aerodynamic
vehicles. The Commission is currently preparing to review Directive 96/53/EC on
maximum weights and dimensions of road vehicles which will, inter alia, allow
fuel savings of up to 10% through retrofitting existing trucks and redesigning
future ones for the purpose of improving aerodynamics.

For light-duty vehicles, the respective CO2
Regulations have defined 2020 targets at 95 g CO2/km for cars and
147 g CO2/km for vans. The Commission has as a result of the review
of these Regulations proposed modalities for reaching, by 2020, these targets
in a cost-effective manner.

To enable the automotive industry to carry
out long-term investments and innovation it is also desirable to provide
indications on the likely form and level of ambition of CO2
reduction targets beyond 2020 in a timely manner, taking into account the
Union's long term climate change goals.

The Commission:

–
recently adopted proposals to implement the 2020
CO2 targets for cars and vans[17].
In terms of modalities, the proposals foresee a continuation of the
eco-innovation provisions, supercredits for low-CO2 emitting vehicles
and an exemption for the smallest manufacturers.

–
will start a broad consultation on CO2
regulatory policy for cars and vans beyond 2020 setting out a number of aspects
on which views will be sought, and then the responses to which will feed into
the determination of the form and level of ambition of future policy in the
context of the envisaged review[18].
The Commission will take into account issues, such as cost-effectiveness, the
expected development of CO2 reduction technologies and other
relevant factors.

–
will embed the above policy measures in a
wider and integrated policy on CO2 reductions from road
transport, through the implementation of the White Paper on Transport Policy, covering
vehicle technology, infrastructure, driver behaviour and other measures.

–
will propose a review of Directive 96/53/EC at
the beginning of 2013 to allow for a more aerodynamic design of trucks.

Pollutant and noise emissions

In recent years, it has become clear that
the current procedures used for measuring pollutants, CO2 emissions
and fuel consumption of light-duty vehicles (cars and vans) are not
sufficiently representative of real-world driving. A revision of the driving
cycles and the test procedure is therefore envisaged and currently being
prepared at a global level, based on data collected on real-world driving
behaviour. Improving the test-cycle and establishing clear testing conditions
resulting in comparable and representative values is important in order to
deliver the expected reductions from regulatory measures, financial incentives
and in order to provide reliable information to consumers.

In addition, many Member States do not
comply with the requirements set in air quality legislation and are facing significant
problems with ambient NO2 concentrations. In particular, regulatory
air quality requirements defined by Directive 2008/50 EC fail to be met in
urban areas ("hotspots"), mainly for particulate matter, nitrogen
oxides and ozone. This situation occurs in part due to the NOx (NO + NO2)
emissions of local traffic road vehicles, which are likely to be significantly
higher under real driving conditions than the regulatory emission limits
measured on a test cycle, particularly for diesel vehicles.

Given the pressing air quality problems,
there is a need to proceed with the implementation of Euro 6 as foreseen and to
identify measures as soon as practically possible to enhance the emission
reductions of vehicles on the road.

The Commission recognises
the importance of ensuring an effective reduction of real driving NOx emissions
in order to meet current and future objectives set out in air quality
legislation. As a result and in order to implement the requirements of
Regulation (EC) 715/2007, the Commission launched in January 2011 the
development of a future test procedure, to be integrated in the type approval
framework, directly assessing the NOx emissions of light duty vehicles under
real driving conditions.

Real driving emissions (RDE)
of NOx measured by this "RDE procedure" should be recorded and
communicated as from the mandatory Euro 6 dates (in 2014). At the latest three
years after these dates, the RDE procedure should be applied together with
robust not-to-exceed (NTE) emission limits, which will ensure a substantial
reduction of real driving NOx emissions with respect to the emission level
expected if such RDE procedure would not be applied. These three additional years,
given in order to introduce binding NTE limits, are considered necessary since
the Commission is aware that in many cases a significant redesign of diesel
vehicles will be required to achieve Euro 6 NOx emission limits under normal
driving conditions.

Further, the legislation on noise emissions
from vehicles is being reviewed, based on an impact assessment. Noise related
health impacts will be reduced through more stringent limit values. A new test
procedure has been developed and tested in recent years. This procedure is more
representative of real-world driving and can now be implemented. Together,
these provisions will contribute to a reduction in road traffic noise levels.

The Commission:

–
will actively support the development and
implementation of a new driving test-cycle and test procedure to measure
fuel consumption and emissions from cars and vans that is more representative
of real-world driving, taking account of the characteristics of the EU market.
The modalities for the inclusion into the EU legal framework of the new cycle
and test procedures should be defined before 2014, including the methodology
for correlation of the CO2 targets established on the basis of the old
cycle and procedure. For the emission testing, the
implementation of the new cycle and procedure should ensure compliance with the
Euro 6 limit values under real driving conditions, with appropriate
transitional arrangements from 2014 up to 2017. For CO2
testing, the implementation of the new cycle and procedure should take into
account and be consistent with the environmental objectives already defined and
avoid imposing any unnecessary burdens on stakeholders. The definition of the
driving range for electric vehicles will also be considered.

–
will propose before 2014 complementary measures
controlling vehicle pollutant emissions in use, based on a thorough
analysis, with the aim of delivering a timely reduction of real-world pollutant
emissions, hence, contributing to improved air quality.

–
has in December 2011 proposed a new vehicle
noise emissions Regulation[19],
as part of an integrated policy approach to ambient noise reduction,
including a new noise measurement test procedure and a further reduction
of vehicle noise levels. Appropriate 'lead-time' should be provided to
industry, consistent with the extent of the required technical adaptations.

Road safety

Road safety has been and will remain an EU
and national policy priority for many years. It offers an interesting example
of the effective implementation of the integrated policy approach. The EU is a world
leader in the area of road safety, and our vehicle fleet is comparably new and
safe. Car design plays an important role both for crash avoidance and crash
protection, not least with the help of safety devices mandated via the EU type
approval framework.

Important progress has been achieved in the
reduction of road fatalities by a combination of measures, tackling the
vehicle, the driver and the infrastructure, applied at EU, national and local
levels. These encouraging results should, however, not give rise to complacency
and a new target for 2020 of a further reduction of road fatalities in the EU by
50% compared to 2010 was proposed[20].

The Commission:

–
will continue to implement road safety work in
line with the focus areas and objectives of its Policy Orientations
2011-2020[21],
covering actions on vehicles, infrastructure and driver behaviour. The right
policy mix needs to be found, combining regulatory and other measures and will
be defined based on an in-depth impact assessment. Priorities include
motorcycles, safety of new vehicle technologies (EVs) and technologies
supporting driver behaviour and enforcement of road rules (intelligent speed management
devices, seat belt reminders, ITS, ecodriving).

–
will further promote the deployment of Intelligent
Transport Systems (ITS), including cooperative systems, in particular the EU-wide
in-vehicle emergency call system "eCall". Appropriate legislative
measures ensuring strong coordination and a timely and complete deployment of
all elements related to eCall are being put in place in order for this
life-saving system to function effectively from 2015.

–
calls on Member States, local authorities and
stakeholders to cooperate in a constructive and coordinated way to develop the
most promising measures to improve road safety and to deploy ITS. The
Commission is also carrying out an in depth-assessment of the most appropriate
in-vehicle safety systems to improve further road safety and vehicle safety in
the EU, preparing a roadmap for the deployment planned for the end of 2013.

Alternative fuels and infrastructure

An appropriate diversification of the
energy sources used for transport will contribute to meeting the EU's climate
goals and improve its energy security. While there are still substantial
hydrocarbon reserves, it is likely that prices could become increasingly
volatile while surplus capacity decreases. In parallel to the improvement of
energy efficiency, this also requires the marketing of alternative fuels, such
as electricity, hydrogen, sustainable biofuels, methane (natural gas and
biomethane), LPG. For the overall policy framework, the merits of each fuel and
powertrain combination should be assessed on a well-to-wheel basis[22], including also life cycle
aspects. Given the novelty of many fuels, their performance should be kept
under continuous review.

Market penetration of alternative fuels
requires the build-up of appropriate infrastructure. This as well as the subsequent
development of a market for the relevant vehicles would also serve to promote
economic growth and job creation. The roll-out of alternative fuel
infrastructure should be in step with technology development and market
penetration rates of vehicles powered by alternative fuels, bearing in mind
their cost-effectiveness. Different forms of public support for infrastructure
are possible: pilot projects, standardisation, investment support and
legislation. Public policy can support market introduction but thereafter markets
must decide on the best solutions themselves, within the given policy framework,
taking into account any economic and social impacts.

The Commission is currently preparing the
Clean Power for Transport package which should provide a framework to guide
investments and technological development in this area. It aims to facilitate
the development of an internal market for alternative fuel vehicles and vessels
including the necessary infrastructure, by removing technical and regulatory
barriers across the EU.

With respect to electric vehicles, in 2010,
the Commission gave a mandate to the European
Standardisation Organisations (ESO) to adopt new standards with the aim of
ensuring interoperability and connectivity between the electricity supply point
and the charger of electric vehicles. The standardisation process has
not yet delivered a satisfactory result on the infrastructure side. The CARS 21
Report called for the adoption of a single standard throughout the EU. The
Commission will investigate the connection between the vehicle and the grid and
also monitor new business models that may emerge that promote the synergies
between electricity storage that electric vehicles provide and the flexibility
that the electricity system needs, including common standards and protocols for
the connection between electric vehicles and grids, as well as interoperability
for communication and payment.

The provision of clear information for
consumers on fuels and their compatibility with vehicles, such as labelling, requires
further attention. The Commission will closely monitor the issue with a
consumer market study currently being conducted on the functioning of the
market for vehicle fuels from a consumer perspective.[23]

The Commission will:

–
propose within the coming months an Alternative
Fuels Strategy, as part of the Clean Power for Transport package, supporting
the need for a range of alternative fuels in the
context of delivering the EU climate and environmental objectives and in relation to security of the EU's energy supply.

–
adopt, as part of the Clean Power for Transport
package, a legislative proposal on alternative fuel infrastructure, concerning
the deployment of a minimum refuelling/recharging infrastructure and common
standards for certain fuels, including electric vehicles.

–
propose a legislative measure at the latest by
2013 to ensure that practical and satisfactory solutions for the
infrastructure side of the recharging interface for electric vehicles are
implemented throughout the EU, in case no agreement is reached on a voluntary
approach among stakeholders involved through the standardisation process. It
will take into account the synergies between the electricity system and the
electric vehicles.

–
pursue the dialogue with relevant stakeholders
on a fuel labelling scheme consistent with the relevant European
standards with a view to ensure that the consumer has easy-to-understand
information about the compatibility of his/her vehicle with the different fuels
offered at refuelling stations.

–
monitor the
implementation of the National Renewable Energy Action Plans, in particular the
effective biofuel blending rates used in different Member States and the
compatibility of fuels with vehicle technologies.

4.2.        Improving market conditions

Maintaining an
automotive manufacturing base in the EU can only be ensured if favourable
business conditions are provided. For several of these conditions, such as
labour law, this relies heavily on national policies. However, EU policy also
has a clear influence on framework conditions, notably through regulatory
policy. It remains a priority for the Commission to improve business conditions
for industry in Europe by providing a reliable, predictable and favourable
framework and to implement the principles of smart regulation, such as
cost-effectiveness, lead times, long-term targets and stakeholder consultation.

A stronger internal market

A well-functioning internal market with a
level playing field is a key contributor to a strong and prosperous European
car industry in the long run. This is particularly true in the current
difficult economic context, where manufacturers are under pressure to adapt
capacity.

The European automotive industry represents
a multitude of small and big companies, active in different parts of the
distribution, supply and service chain. This enormous diversity is considered a
strength and an asset for the future, as small companies today may deliver
strategic innovation tomorrow and grow into major players. Therefore, it is
important to foster constructive, transparent and respectful relations among
the different actors in the automotive sector, including the repair, maintenance
and customer service sector.

The changes in the competition law
framework for the distribution of motor vehicles in Europe (further to the
expiry of the Motor Vehicle Block Exemption Regulation 1400/2002) may have an
impact on the organisation of the vertical relations between vehicle
manufacturers and distributors. In order to manage this transition in a balanced
way, a self-regulatory initiative is encouraged by the Commission. Furthermore,
the Commission will continue to ensure the respect of EU rules on competition
in the markets for the distribution of motor vehicles and for the provision of
repair and maintenance services as well as the distribution of spare parts.

Another important objective of vehicle
regulation is to strengthen the EU internal market for motor vehicles. One must
recognise that today, while the regulatory requirements are identical throughout
the EU, market conditions are very diverse in different Member States. The
measures to influence demand, such as financial incentives, put in place to
promote clean and energy efficient vehicles do not all follow the same
approach. This fragmentation can be expected to reduce the potential for
development and placing on the market of such vehicles. Therefore, stronger coordination
of such measures is deemed necessary.

For consumers, the second hand car market
is also important. A consumer market study will be
carried out on the functioning of the second hand car market.

The Commission will:

–
set up by 2013 a dialogue between stakeholders,
encouraging them to work towards common principles on vertical
agreements on the distribution of new vehicles. Stakeholders are invited to
participate constructively in this dialogue, aiming at a balanced outcome.

–
put forward in 2012 guidelines for financial
incentives for clean and energy-efficient vehicles put in place by Member
States in order to promote stronger coordination, to maximise their
environmental effectiveness and limit the fragmentation of the market[24]. Such incentives should avoid
being technology-specific, instead relying on objective and commonly available
performance data, such as the CO2 emissions from the vehicle. Member
States will be invited to take these guidelines duly into account when
designing their incentive schemes.

Smart regulation

A healthy and dynamic internal market also
needs appropriate regulation, which avoids unnecessary burdens for stakeholders
and offers an investment-friendly climate. Automotive products are essentially
regulated through the EU legislative framework for type-approval. Although this
system seems to generally function in a satisfactory way, continuous evaluation
remains necessary to identify ways of improvement. In particular, a revision of
the procedures for the surveillance of the automotive products placed on the EU
market is needed, in order to make sure that vehicles are safe and citizens can
fully trust the regulatory framework put in place. This will contribute to
establishing a level playing field among all actors and to increased trust of
consumers in effective product regulation, while limiting administrative
burdens.

The principles of smart regulation have been the key
deliverable in the first CARS 21 exercise and they have been reaffirmed in the
re-launched process. The Final CARS 21 Report furthermore stressed the
importance of taking into account the current competitive pressure on
costs, the cumulative effect of the legislation and the situation of SMEs. A
comprehensive and consistent application of principles
of smart
regulation will be ensured,
integrating an in-depth assessment of the impacts on industry, society and
other stakeholders, notably the associated costs and benefits, considering also
that the affordability of buying and owning a car is a fundamental pre-requisite
so as to maintain a strong market. On that basis, the impact assessments for
policy proposals relevant for the automotive industry, such as those referred
to in other parts of this Communication, should systematically include also a
competitiveness proofing exercise in order to determine the impact of new
measures on the automotive industry. The application of these princples will ensure
that the Commission proposals will be well-targeted and cost-effictive.

The Commission will:

–
carry out
an extensive and in-depth evaluation (fitness check) of the vehicle
type-approval framework. In 2013, it will adopt a
proposal to enhance the type-approval framework to include provisions for
market surveillance in areas where a need has been identified, in order to
ensure vehicles and their components are safe and compliant with relevant legal
requirements, and that this framework effectively achieves the relevant policy
objectives.

–
within its impact assessment system, carry
out a rigorous competitiveness proofing exercise for relevant major future initiatives,
including those with a significant impact on the automotive industry. The
competitiveness proofing will consider the economic situation and what impact a
new initiative is likely to have on the industry's competitive position,
especially on global markets. The future Free Trade Agreements, safety and
emissions and other initiatives having a significant impact on vehicles will be
subject to competitiveness proofing - in line with the operational guidance for
assessing impacts on sectoral competitiveness within the Commission's impact
assessment system[25],
which also takes into account the broader, overall societal and economic
impacts. These principles have been very recently reiterated in the updated Industrial
Policy Communication.

–
explore the possibility and added value of
carrying out a proportionate economic analysis for some implementing acts, based
on existing vehicle legislation, such as the proposals on the
revision of evaporative emissions requirements for Euro 6 and anti-tampering
measures for L-category vehicles (powered 2- and 3- wheelers and quadricycles).
However, if these
acts are expected to have significant impacts they will be accompanied by
impact assessments in line with the Commission's Impact
Assessment guidelines.

4.3.        Enhancing competitiveness on global markets

The automotive industry is clearly global.
Trade in automotive products is increasing steadily and third markets are
becoming ever more important for the EU. The European
automotive industry has a very strong position in international trade and
clearly benefits from the market opportunities on both mature and emerging
markets, which partly offsets the difficult situation in the European market.
The current situation, cannot however be taken for granted. International
competition intensifies rapidly with new entrants and the constant evolution of
technology. At the same time, ensuring an open global market place remains a
challenge - especially because of the existing and new non-tariff barriers
(NTBs). While the industry strives to keep its competitive edge, the role of
public policy is to ensure a level playing field in terms of market access.
With that objective in mind, the CARS 21 Report advocates for action via trade policy in the broadest sense, including market access and regulatory
harmonisation.

Trade policy

Thereis a need for trade and industrial policies to
be closely coordinated.

Concerning the various trade instruments, Free Trade Agreements (FTA) are considered an important means to
improve market access in third countries. The acceptance
of international regulations under the 1958 UNECE Agreement[26]
is the best way to remove non-tariff barriers to trade. There is also a need to
strengthen bilateral regulatory cooperation with third countries, such as those
which are not Contracting Parties to this agreement, with a view to eliminating
non-tariff barriers in the automotive sector.

The Commission will:

–
take full account of the importance of maintaining
a strong and competitive automotive manufacturing base in Europe when
conducting its trade policy, using both multilateral and bilateral tools. Both
should be used to tackle the key issues of removing tariff and non-tariff
barriers. FTAs should aim at full tariff
dismantling and removal of Non-Tariff Barriers. The
overall impacts of each trade negotiation will be assessed in a thorough and
comprehensive way.

–
assess the impacts of trade agreements as well
as their cumulative impact on the competitiveness of this industry by launching
a study into already concluded FTAs and those likely to be concluded in the
near future. The study will be launched shortly by the Commission and concluded
by the end of 2013. The results will be discussed with the relevant stakeholders.

–
complement multilateral regulatory cooperation
under the UNECE framework with bilateral regulatory cooperation in
particular with key new players, but also with, for example, the United States
- under the Transatlantic Economic Council - and with Japan.

International harmonisation

International harmonisation of vehicle regulations has been a
priority for the Commission for many years. Agreeing common regulations with
other major markets around the globe offers the benefit of lower compliance
costs, generates economies of scale and reduces technical barriers to trade. The
overall objective must be to establish the principle of "tested once,
admitted everywhere", whilst ensuring the promotion and maintenance of the
highest safety and environmental standards. The final CARS21 Report concludes
that the most effective instrument for international regulatory harmonisation
is the UNECE 1958 Agreement, provided it is modernised to accommodate the needs
of emerging economies and to the extent that it enables the mutual recognition of international whole vehicle type approvals
(IWVTA) starting with the category of passenger cars.
The Commission is committed to carrying out several actions in the coming
years.

The Commission will:

–
promote and actively support further
international harmonisation of vehicle regulations along the lines set out
below. The reform of the 1958 UNECE Agreement is a key element of this strategy
and will aim to make adoption and implementation of international regulations more
attractive for third markets. Member States and stakeholders are invited to
support this effort. The Commission will steer the development of a first
proposal for the revised 1958 Agreement in March 2013.

–
contribute to the development of a first
proposal for a new Regulation[27]
on IWVTA by November 2013. The IWVTA Regulation
will substantially reduce the administrative burden related to the introduction
of the same vehicle model in countries which are Contracting Parties to the
1958 Agreement.

In parallel to the work on the 1958 Agreement, the Commission will
also work to obtain concrete results under the 1998 Agreement[28]. With the recent political
momentum created by the EU-US High Level Working Group on Jobs and Growth and
the Los Cabos statement[29]
acknowledging the potential benefits of a comprehensive free trade agreement
between the EU-US, there is more potential for keener engagement of the US and
more successful work under the 1998 UNECE Agreement. The most promising areas
of work are breakthrough technologies, notably hydrogen and electric
powertrains. The Commission together with the US agencies has taken leadership
in 2011 in the framework of the Transatlantic Economic Council to launch the
work on electric vehicles. Consequently, two informal working groups were set
up, the first on regulatory requirements for safety and the second on
environmental performance of electric vehicles. The groups quickly attracted
interest from many other contracting parties and have grown into multilateral
fora under the 1998 Agreement. Concrete results should be available in the next
few years.

The Commission will:

–
steer the work of the two informal working
groups on (1) safety and (2) environmental performance of electric vehicles with a view to agreeing a Global Technical Regulation (GTR) on the
safety of electric vehicles in 2014 and a common approach in terms of policy on
environmental performance of electric vehicles. Both informal working groups
were launched on the initiative of both the EU and the US but have already
attracted a broad membership, including Japan, China and Canada. The agreement
on a GTR on electric vehicle safety will be of key importance so as to ensure
economies of scale for manufacturers and reassure consumers on the adequate
level of safety of electric vehicles.

–
promote, based on input from stakeholders,
stronger international cooperation between standardisers to achieve common or
compatible standards on electric vehicle safety, infrastructure and
interoperability.

4.4.        Anticipating adaptation and managing
restructuring

Economic and social parameters evolve over
time, changing the competitive position of production locations. Companies,
workers and economies that are quickest to adapt to the new situation are the
ones gaining an advantage in the global marketplace. The strengths of the European
economy are based on knowledge and excellence. This means that Europe needs to
invest in its human capital and adapt its production capacities to the new
realities, including new technologies and evolving markets. Public intervention
should be targeted to help workers and companies carry out this adaptation, safeguard
the internal market and a level playing field and ensure that the negative
social consequences of any restructuring are kept to a minimum.

Human capital and skills

The investment in human capital via skills development
and training is absolutely essential in order to keep a manufacturing base in
Europe. The availability of a skilled workforce is a key factor for growth and
competitiveness of the automotive industry and it will be indispensable in
order to build up leadership in break-through technologies. On the other hand, industry
is already faced with existing qualified labour shortages and the need to
correctly identify the skills needed in the future. Appropriate qualifications
for workers, as well as vocational training and life-long learning have to be
ensured.

Skill shortage is a critical issue. Quick
actions with long-term goals are needed at the national level to fundamentally
modernise education and training systems in order to upgrade the supply of
skills, through, inter alia, new curricula, opening up education and training
through ICTs and new forms of partnership with employers. At the European
level, this problem relates not only to the automotive sector but to other
sectors as well. The Commission will shortly outline a set of strategic
priorities for addressing these issues in its communication on "Rethinking
Education: Investing in skills for better socio-economic outcomes". As a
horizontal issue it is also tackled within Europe's employment policy, notably
by the recent Employment Package[30].
In addition, the following sectoral initiatives will be of key importance. Given
the changes in skill needs witnessed in the EU labour market a complementary
solution to the shortages could be also to attract the necessary skills from
outside the Union.

The Commission will:

–
following the recently completed feasibility and
added value assessments, support in 2013 the creation of a European
Automotive Skills Council[31],
which will bring together existing national organisations conducting research
on skills development and employment in the automotive sector. The Skills Council
will also involve employers’ and workers’ representatives at European and
national levels and education and training providers' organisations. The Skills
Council will encourage peer learning based on the exchange of information and
good practice as well as providing a platform for dialogue. It will start
by analysing trends in automotive employment and skills, which will form
the basis of recommendations aimed at policymakers, education, training
providers and other stakeholders.

–
encourage the use of European Social Fund
(ESF) for workers' retraining and re-skilling. Without prejudice to
the decisions that will be taken in the Multi Annual Financial Framework on the
ESF, Member States will be encouraged to make more use of the systemic projects
addressing skills needs, skills matching and anticipation of change and propose
life-long learning opportunities.

Dealing with industrial adjustment

While on the one hand, the automotive industry faces the
problem of availability of a qualified workforce, on the other hand there is a
need to deal with the social consequences of restructuring, when job losses are
unavoidable. Some restructuring decisions have already taken place reflecting
declining sales on the European market and more adjustments may be necessary.
It is of the utmost importance to avoid a situation in which plant closures or
downsizing provoke a ripple effect throughout the regional economy because of
redundancies. Companies have to observe the EU Directives on collective
redundancies and information and consultation of workers as well as the
good practice of anticipating change[32].
In this regard, good social dialogue at all levels (company, local, national
and EU levels) is a key element in the anticipation and good management of
restructuring processes. The restructuring process is mainly the responsibility
of the industry, yet there is a complementary role for the Commission, Member
States and local authorities.

The Commission adopted early 2012 a Green Paper on
restructuring with the aim to identify successful practices and policies in the
field of restructuring and adaptation to change[33].

The Commission has also proposed to continue the
European Globalisation Adjustment Fund (EGF) over the period 2014-2020, improve
its functioning and to expand its scope, in particular to new categories of
workers (e.g. temporary workers). Until now, the EGF has provided support in 16
cases in the automotive sectors and almost 21 000 automotive workers have
been targeted by EGF assistance worth EUR 113 million.

The Commission will:

–
continue to monitor/review restructuring
activities as regards to their strict compliance with EU legislation,
in particular concerning state aid and internal market rules.

–
identify good practice and promote an anticipative
approach in restructuring in
consultation with representatives of the automotive-intensive regions,
employment authorities and the sector's stakeholders, including the social
partners.

–
re-launch the inter-service task force to
study and follow up the main cases of automotive plant closures or
significant downsizing. The task force has been active and highly efficient
in past cases in the automotive industry[34].
The task force would streamline the use of the relevant EU Funds (by providing
technical assistance, reducing waiting time, advising on the most effective use
of resources, monitoring and reporting).

–
for the cases of plant closures and significant
downsizing, invite the Member States to consider using the European Globalisation
Adjustment Fund (EGF).

–
encourage Member States to make use of labour
flexibility schemes and their co-financing by ESF in support of the
suppliers who might need additional time to find new clients following a
closure/downsizing of an automotive plant.

5.           Monitoring
and governance

The constructive discussions in the CARS 21 High Level Group have
highlighted the usefulness and the need to continue the dialogue among major
stakeholders (from both the private and the public sector, as well as from civil
society) in this strategic industrial sector. In addition, the updated
Industrial Policy Communication called for the creation of a Task Force for
clean vehicles.

The Commission proposes to launch the CARS 2020 process to monitor
and take stock on a regular basis of the implementation of the CARS 21 recommendations
and the Action Plan. This process would entail an informal annual high-level
meeting, prepared by a Sherpa group. In order to ensure coherence and
continuity, the composition of this group would remain similar to the one of
CARS 21, without prejudice to possible adaptations.

Also, dedicated meetings at expert level could be set up on an
ad-hoc basis with a view to enhancing the knowledge base of the Commission and broaden
stakeholder consultation.

The Commission will:

–
set up in 2013 a high-level process called
CARS 2020, in order to monitor the implementation of the CARS 21 recommendations,
as well as the measures set out in this Action Plan.

–
organise ad–hoc expert meetings on economic
and competitiveness issues for the automotive sector.

It will be up to the new College to
consider whether this process should be maintained in its proposed format, or
whether adjustments or adaptations may be necessary.

[1]               The term automotive industry is meant to cover the
entire supply chain, covering vehicle manufacturers, suppliers, distribution
and after-market services. Products include passenger cars, light- and
heavy-duty commercial vehicles and powered two-wheelers, three-wheelers and
quadricycles.

[2]               COM (2012) 582 final, adopted on 10 October 2012

[3]               COM(2010)186 final, 28.04.2010

[4]               Available on http://ec.europa.eu/enterprise/sectors/automotive/files/cars-21-final-report-2012\_en.pdf

[5]               including battery electric, plugin hybrid and extended range
electric vehicles

[6]               Precise data on overcapacity are subject to
discussion, as it depends among others on the number of shifts used in a given
factory. Analysts agree that some overcapacity is actually needed for business
flexibility, but that excess capacity is problematic.

[7]               COM (2011) 808 final, 30.11.2011,
COM (2011) 809 final,30.11.2011.

[8]               COM (2011) 834 final, 30.11.2011

[9]               COM (2012) 501

[10]             COM (2011) 144 final

[11]             http://setis.ec.europa.eu/

[12]             European Institute of Innovation and Technology

[13]             Knowledge and Innovation Communities

[14]             COM(2010) 614

[15]             ELENA (European Local ENergy
Assistance) technical assistance facility for projects on sustainable energy in
towns and regions.

[16]             COM (2007) 19 final

[17]             COM/2012/393 and COM/2012/394

[18]             COM(2012)393 final

[19]             COM/2011/856 final

[20]             COM (2010) 389 final

[21]             Idem.

[22]             Integrating emissions generated over the life-cycle of
the fuel, including extraction, production and actual use

[23]             The study will give an insight on whether consumers are
able to make informed purchasing decisions including issues related to
understanding and transparency of information, for example understanding of
information on labels, understanding of differences between fuels and
understanding of suitability of fuels for cars. The results will be published
by end 2013.

[24]             Measures constituting State aid will continue to be
assessed under the relevant State aid rules.

[25]             Staff Working Paper SEC(2012)91 final, 27.01.2012

[26]             The 1958 Agreement of the United Nations Economic Commission for
Europe (UNECE) on international technical harmonisation in the motor vehicle
sector

[27]             According to the established principles of the 58
Agreement, Contracting Parties applying the most stringent version of the IWVTA
Regulation will not have to accept type-approvals issued according to a less
stringent version.

[28]             In the framework of 1998 Agreement Global Technical
Regulations are developed.

[29]             MEMO/12/462, 19.06.2012

[30]             COM(2012) 173 final, 18.04.2012

[31]             Project run by the social partners and supported by the European Commission / DG Employment, Social Affairs
and Equal Opportunities

[32]             These good practices notably include the text of 2003
entitled "Orientations for reference in managing change and its social
consequences" which, however, was not formally adopted by ETUC.

[33]             COM(2012) 7 final

[34]             For example, the cases concerning VW Forest and MG
Rover in West Midlands;

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