Impact of the financial crisis on the car industry (debate) 
President
The next item is the Council and Commission statements on the impact of the financial crisis on the car industry.
Alexandr Vondra
President-in-Office of the Council. - Mr President, I think that we are now moving into a really important issue. Under the current circumstances, this is something that must be discussed. Once again, we are grateful for this timely opportunity to discuss the effect of the current economic and financial crisis on the automobile industry.
As many of you are following very closely in your constituencies, the automobile industry is a key factor for the whole of the European economy. Over the years, we have promoted the competitiveness of the sector by establishing a single European automobile market and calling for fairer competition in trade with third countries. More recently, we have focused on reducing car emissions in order to combat air pollution and climate change. In all these areas this Parliament has given us its consistent support.
Thanks to these efforts, and in particular to the resilience and adaptability of the European automobile industry, European cars are today among the best, the most innovative and the most competitive, as well as the safest, most fuel-efficient and environmentally sustainable in the world. We should be proud of Europe's record.
Nevertheless, despite its resilience, and as a result of factors largely outside its control, the European automotive sector has been particularly badly hit by the global economic crisis. These difficulties were already apparent in November last year, when the Council agreed on an approach based on promoting even more sustainable and fuel-efficient cars, realistic targets for manufacturers, and effective incentives for stimulating demand.
In the short time since then, the situation has become more serious. The industry has reported that 8% fewer cars were sold in the Union last year than in the previous year, to compare 2008 with 2007. The situation is likely to remain as bad - if it does not get worse - in 2009, hitting not just the automotive constructors, but also the whole automotive industry supply chain.
Ministers met my friend, Günter Verheugen, the Commissioner and the Vice-President of the Commission, on 16 January to discuss the specific problems facing the automobile industry. They expressed particular concern that the current difficulties would put at risk a significant number of jobs and underlined the importance they attached to the future of the industry.
Of course, the primary responsibility for responding to these challenges rests with the industry itself. The industry must be encouraged to take all necessary steps to address structural problems such as overcapacity and lack of investment in new technologies.
However, the importance of this industry for the European economy, and the fact that the sector is hit particularly hard by the current crisis, means that some sort of public support is required. This is reflected in the European Economic Recovery Plan agreed by the European Council last December, as well as in the Member States' national programmes. Of course, we cannot allow short-term support for the industry to undermine its long-term competitiveness. This means focusing clearly on innovation.
Member States agree that public support for the automotive industry needs to be both targeted and coordinated. It also needs to respect some key principles, such as fair competition and open markets. It should not be about a race for subsidies, and it should not result in market distortions. In order to achieve this, Member States have confirmed their willingness to cooperate closely with the Commission on both supply-side and demand-side measures taken nationally. The Commission has, in turn, undertaken to provide a swift response in cases where it is required to react.
More generally, the Council's Presidency fully supports the Commission on the need to advance rapidly with the implementation of the European Economic Recovery Plan. The Commission has also been invited to explore, together with the European Investment Bank, how the utilisation of the loans envisaged for this sector can be further improved in terms of rapid availability, project financing and frontloading of the loans, without discriminating between manufacturers and Member States.
With regard to the global environment, we clearly need to engage in an early dialogue with the new US Administration as well as with our other global partners.
The Czech Presidency is determined to push forward with this overall policy of support for the industry, whilst respecting the principles and parameters to which I have referred. There is already a wide range of Community instruments which can play their part in providing support, not least in the area of new technology, for example in the development of clean cars. The full potential of innovative and environmentally sustainable propulsion technologies - fuel cells, hybrid, electrical, solar power - needs to be fully explored and put into operation.
On the other hand, there are also more ready-made and rapidly available instruments, such as, for example, the scrapping scheme for old cars. These instruments could combine the demand impulse for new cars with positive externalities in terms of transport security, reduction of emissions and others. There are now several Member States which already use this instrument. Therefore, the Presidency would like to ask the Commission immediately to put forward a proposal on how to encourage, in a coordinated manner, European car fleet renewal in the area of vehicle recovery and recycling, based on the analysis of the impact of these schemes in different Member States. Our aim is to have a proposal from the Commission some time ahead of the Spring European Council, in the context of the evaluation of the Recovery Plan, and to be able to discuss the issue during the Competitiveness Council in March. This will be headed by my colleague Martin Říman and Vice-President of the Commission, Günter Verheugen. Such schemes may provide an important demand stimulus for the automotive industry at Community level and should also ensure a level playing field within the internal market. I would like to underline the second half of the sentence, also in the current context.
To summarise: this is not just about supporting a key sector of our economy but is an approach from which we all stand to benefit in the long run.
Günter Verheugen
Vice-President of the Commission. - (DE) Mr President, Mr President-in-Office of the Council, ladies and gentlemen, Mr Vondra has just informed you all of the outcome of the discussions that I held with the Ministers responsible for the motor industry on 16 January. I can but confirm everything that was said, although I would also counsel caution at the same time. We must be careful, now, not to raise hopes or expectations that we just cannot live up to. Allow me to go into some further detail about the position of the European motor industry at this time.
Experience shows that cars are an early indicator of economic trends. It was therefore no surprise that the heavy fall in demand in vehicles that we experienced last summer was then followed by an economic downturn in all the other sectors of the economy. Why is this the case?
Thedrop in demand is a symptom of a lack of confidence in the way the economy is heading. Consumers behave no differently to enterprises in this respect. In uncertain economic times, when people do not know what is going to happen to them, they cling on to their money. In a private household, the purchase of a new car is the largest investment, over a number of years. It is something that can be put off, however, as, of course, a European car can always last another year.
Everybody knows that the situation will only fundamentally improve when the general confidence and belief in the overall trends in the economy have returned. This means that the measures that we put in place together in Europe in order to combat this crisis overall are absolutely the most important thing.
I would like to give a few more figures in order to demonstrate how important this is. The European motor industry employs 12 million people directly and indirectly. That represents 6% of all the jobs in the European Union. It is the most important sector of the economy as far as European exports are concerned. Our biggest export surplus is in motor vehicles.
In 2007, we produced 19.6 million motor vehicles in Europe. Last year, this figure was nearly one million lower and it will fall again significantly in 2009. There are currently stockpiles of 2 million unsold vehicles. The motor industry is the industry in Europe that invests the highest proportion of its turnover in research and development. On average, carmakers invest 4% in research and development. This compares with an average of just 2% for European companies as a whole. In simple terms, then, it is a key industry for Europe.
The economic crisis has hit this industry in every sector at the same time. This has never happened before - it is a first - and I have to tell you that the public only think of the situation as regards passenger cars. The plight of commercial vehicles is much more dramatic. Here, new orders in the whole of the European Union have fallen to practically zero, and that when there is a production capacity of almost 40 000 commercial vehicles a month.
The negative impact on the employment situation is unavoidable, and for two main reasons. We have a decided overcapacity in motor vehicles in the European Union. The industry itself concedes an overcapacity of 20%. There are people who say it is much higher still. Twenty per cent, however, is still a very high figure, and when you compare this with the numbers of people employed by this industry, we are talking about more than 400 000 jobs. There is absolutely no doubt that European carmakers will be engaging in an accelerated implementation, during this year of economic crisis, of the re-structuring measures that have been planned for some time. This point I will make quite clearly: there is no guarantee that, at the end of this year, we will still have all the production sites in Europe that we have at the moment. There is a high probability that, by the end of the year, a whole series of those production sites will no longer be in operation. There is not even a guarantee that, by the end of the year, all the European manufacturers will still be in the market.
The pressure of international competition in the motor industry is very strong. As European legislators, we have heightened this competition still further by making considerable demands of the European motor industry over the coming years. The industry is required to make considerable strides in terms of innovation. So that Mrs Harms does not criticise me again straight away, I would like to make clear to her that I am not criticising this fact - I believe it is right and proper. Do not reproach me for describing the facts as they are. This is not criticism on my part; it is merely an observation. Our legislation has made European cars considerably more expensive and, in the coming years, they are to get much more expensive still. The primary effects of this are to increase the pressure of competition, to increase cost pressure and to increase the necessity for the companies in question to achieve higher productivity. That is the only way to survive this competitive situation.
We all know what greater productivity means in the motor industry. In any event, it does not have a positive impact on the job figures. That is the reality of the current situation.
Our policy now is pursuing two goals at the same time. Firstly, it seeks to get the European industry through this crisis - and I will stress each individual word here - with the aim of losing not a single European manufacturer where possible. Not one. The second goal is to increase the competitiveness of the European motor industry in the long term and to durably establish Europe as the world's leading car-producing region.
As far as the measures relating to the first of these goals are concerned, we have done everything that could be done. We have provided the European motor industry, especially badly hit by the credit crunch as it was, with access to financing. The European Investment Bank (EIB) is making EUR 9 billion available for this industry alone this year, and I have to tell you that there is no point in asking for more in this House today. Given the EIB's capital base, no more money can be forthcoming. Nine billion euro is already on the table.
Thanks to the hard work of my fellow Commissioner Mrs Kroes, State aid control now takes such a flexible form, and we have changed the rules to such an extent, that the Member States have considerably greater abilities to react quickly and in a targeted manner where assistance is needed in individual cases. The Commission is thereby taking on the role that it has acquired through legislation, which is to say that of ensuring that these measures do not give rise to any distortions of competition and that they do not jeopardise our policy goals. I would like to mention just one example in this regard. It is patently obvious that aid to the European subsidiaries of US companies can only be authorised where it is clear that the aid in question serves exclusively to retain European jobs.
We have implemented a range of measures to push forward the modernisation of the stock of cars on Europe's roads, by means of which we were, at the same time, pursuing the objective of having a positive impact on the environment. Not all the Member States are going to use the system of paying scrapping premiums, but those that do will be following the agreed principles, which is to say that these measures must not discriminate against other manufacturers. To mention one more example, Member States cannot say, 'I will give you a premium if you scrap your old car, but only if your new car is a German one', if you live in Germany, or a French one or a Czech one. It is just not possible to do this.
One thing that is possible, however - and I would welcome this warmly - is for such scrapping premiums to be linked to environmental targets. In other words, for instance, they would only be paid if the new car bought met certain emissions standards. As far as we can see, this system of premiums is working well and is having the positive effect desired.
There is only one way to get the commercial vehicles market going again. Scrapping premiums, as you can imagine, are not possible in this sector. What is needed most of all here is to give small- and medium-sized enterprises in this sector access to finance. We are doing that. It is also necessary to ensure, where public money is being invested, that preference is given to the procurement of environmentally-friendly commercial vehicles, for example in the case of public transport or other public services for which vehicles are needed. We have already done all of this.
In the long term - something of which we have often spoken in this House - what is needed is to implement the recommendations of the Cars 21 process, namely to ensure the future of the European motor industry through greater efforts in relation to innovation, research and development so that the European car of the future is the world's leading car not only in terms of the standard of its technology, its finishing and its safety, but also in relation to fuel-efficiency - meaning low consumption - and environmental friendliness - meaning low emissions. The European industry is going with us on this, and we are supporting the associated projects as part of the European economic stimulus package, as you all know.
Allow me, finally, to say that the most important outcome of the discussions with the Member States was that we all pledged to prevent the occurrence of any race to protectionism in Europe. Such a race to protectionism would result in the financially weaker Member States losing out and would very seriously damage the provision of social solidarity in Europe.
Another thing that we can do to stimulate demand and to help and lead the motor industry through this crisis is to ensure that the conditions of international competition, too, are also not violated. That is a question that must be directed at the United States, in particular. We will see what measures President Obama puts in place to counter the crisis in the US motor industry. In this respect, I would like to point out that it is not in Europe's interest for the American carmakers to go under. The consequences for Europe would be catastrophic if that happened. However, it is likewise not in our interest for the US to institute a policy that would favour its motor industry at the expense of competitors from other parts of the world. I hope that we will get the opportunity to discuss this calmly with our American friends.
The European motor industry is not staring into an abyss. It is in a difficult situation, but it is our firm belief that the industry is capable and strong enough to get through this difficult situation and continue, in future, to play an important role in creating and securing jobs and prosperity in Europe.
Jean-Paul Gauzès
Mr President, Commissioner, ladies and gentlemen, I fear, unfortunately that the message just delivered cannot surely be a message of hope intended to restore confidence. Commissioner, I approved your last but one paragraph on what the car industry should be. Unfortunately, I fear that the proposals made are not up to the mark and in particular they encourage some Member States to manage all alone when Europe is unable to coordinate.
What are our fellow citizens expecting today? They are expecting a great deal from Europe, certainly much too much, but they are expecting us to do something else. The car industry, as you said, employs 12 million people in the European Union and is equal to 10% of GDP. In France, that means 2.5 million jobs or 10% of wage and salary earners, and 15% of expenditure on research and development.
The car industry today is experiencing an unprecedented crisis characterised by a drop in demand, by a need for finance for manufacturers and subcontractors but also consumers, and by a structural competitive challenge for companies facing ever-increasing competition worldwide. If I did not fear being politically incorrect, I would add that the requirements placed on the car industry and the encouragement not to use vehicles are also contributing to this situation.
A coordinated response at European level is essential and urgent to take over and enhance the actions already taken by various governments. It is essential, in the first instance, that the banking system lends normally to the car industry, that is to say at normal rates and conditions and at volumes corresponding to the needs of that industry. Despite the efforts of the EIB, we know that credit still has not started to flow again. Therefore, Europe should make a significant response.
Secondly, it is not only a matter of limiting the impact of the crisis but also of providing the car industry with a new future. A genuine industrial policy is essential. We must enter tomorrow's world and speed up the necessary developments with regard to the protection of the environment and the requirements of sustainable development in particular. We must develop a science-fiction culture. It is imperative that the drive for innovation is not made to the detriment of the crisis and that public aid enables action in this domain.
Guido Sacconi
on behalf of the PSE Group. - (IT) Mr President, ladies and gentlemen, I would like to thank Mr Vondra and Mr Verheugen for their promptness in making these statements. I have to say that for the most part I share their concern and agree with the realistic approach they propose.
After all, we are all aware of the situation. I have seen one estimate saying that 2 million jobs could potentially be lost in the course of the year in the car industry as a whole, the majority of which would be in the parts sector. We are witnessing an extraordinary contradiction. On the one hand, we have a fleet of public and private vehicles - as you have rightly said - that is very obsolete and has high emission levels, while, on the other hand, demand has slowed down dramatically, if not collapsed entirely.
I therefore very much welcome the recovery plan decided on by the Commission, which has sought to use all the tools at its disposal, although we know that they are limited, and we understand the reasons why. There is a real need for a genuinely counter-cyclical move to stimulate demand and provide it with strong support, in line with the environmental targets that we have worked so hard on over the last few months.
And what happens? What happens is that each country acts independently. Some intervene while others do nothing; for example, my country has done nothing so far. Some do one thing, others do another. I agree with you, however, that we should make an effort ahead of the Competition Council next spring to maximise coordination, at least on principles, for example linking scrapping schemes to specific emissions targets. I think that France has come up with a good solution of varying the bonus awarded to purchasers according to the emissions level of the car purchased. This would, I believe, make for a 'win-win' situation in terms of employment, innovation, competitiveness and the environment.
Patrizia Toia
on behalf of the ALDE Group. - (IT) Mr President, ladies and gentlemen, the crisis in the motor industry has spread throughout the entire sector, to ancillary industries, other associated sectors, commercial networks and thus services, and has terrible prospects in terms of employment.
In my view, the appalling drop in the latest registrations - in some Member States this month they are down 33%, or 20%, and so on - shows that the crisis is not in a technologically obsolete sector, nor is it an internal crisis caused by managerial errors in this or that company. It is a systemic crisis, and as such must be tackled urgently and decisively by the European institutions.
Some solutions have been proposed, but the important thing is how, and with what resources and what prospects for innovation, they can be achieved. Of course we must support demand; consumption is the only route to recovery. However, while this consumption support measure is implemented, which is a medium-term measure, I think we have to say that we need immediate credit support to recommence production, pay for materials and retain employees despite the fall in orders and demand.
Credit, then, is the answer, but as we were saying, the important thing is how. I too call for Europe to take a stronger lead; it is important for the European institutions to send out a clear message. The United States are taking action, as are some European countries, and I hope that my country will move on from generic proposals to practical measures, but I hope for stronger European action both within and outside the recovery plan, because I believe, and have explained to the Commissioner at length, that the fate of the great European firms is our shared fate. Large European manufacturers should not encounter competition within the common market in the form of various kinds of State aid or special terms, but should see a response from a strong, decisive and coordinated Europe, since the fortune of the European car market will be measured by our ability to face global competition together.
There is also the other matter, which Mr Sacconi mentioned and I would like to point out once more: this support is not aid, or worse, relief, that maintains the status quo, but it is an incentive for the future competitiveness of the sector, in terms of innovation, environmentally-friendly manufacturing and technologies that better respect the environment and the safety of passengers and transport.
Guntars Krasts
on behalf of the UEN Group. - (LV) Thank you, Mr President. In car manufacturing, just as in the construction sector, resources have been focused on rapid future growth, but development in this area has been in the past and continues to be closely linked to the availability of credit. The financial crisis has therefore hit car manufacturing particularly hard. Stabilisation in the sector will be possible only once bank lending has normalised, and this in turn is linked with surmounting the financial crisis. I have no doubt that the financial crisis will give rise to significant corrections in the future structure of the car market. Our task at the moment is not to preserve existing jobs, but to preserve the future competitiveness of Europe's automotive sector, and so public support for the automotive sector should be linked to two main goals: reducing dependence on oil and the price fluctuations connected with it, and significantly improving environmental indicators and emissions reductions. These tasks overlap with one another. They are also, on principle, important for the European economy as a whole, in order to reduce the risk that an increase in oil prices once the crisis has been surmounted, partly as a result of renewed car buying, might stand in the way of a joint economic recovery process. Thank you.
Rebecca Harms
on behalf of the Verts/ALE Group. - (DE) Mr President, in my opinion, the first priority should be to link the crisis management of the economic crisis with the global challenge that is the climate crisis. We would be making a big mistake if, with our economic measures, we were to pursue goals relating to climate protection and energy security as unambitious as those we have laid down in the regulation of CO2 for cars.
We must not repeat the mistake of paying any attention to the inaccurate whisperings of the motor industry. The mistake made in that regard last winter can now be seen everywhere you look. The same groups that held us back from implementing the ambitious regulation of CO2 for cars are now stuck with their stockpiles of huge gas-guzzlers which they are no longer able to sell. It is my belief that we really must aim to make it clear to the carmakers that the future of cars lies in small, efficient and climate-friendly models and that every effort must be made, in connection with incentive measures, to promote such models. It must also be made clear to what extent innovations such as electric engines are actually covered. However, this is only possible in conjunction with a coordinated plan involving energy policy.
What I would very much like to highlight in what a previous speaker from the Group of the European People's Party (Christian Democrats) and European Democrats said, and it is something I absolutely agree with, is that I am completely convinced that, if we concentrate solely on cars without being aware, at the same time, of how we need to restructure the transport sector and of how the public transport sector will look in ten years' time, we will fall far short of what we need to deliver. This, too, can lead to securing and creating a large number of jobs. By hinting that it is not only cars, but also buses and railways, and so on that are produced, Commissioner Verheugen gave an important hint.
So, then, we must think beyond today and plan and promote future-oriented transport systems now.
Roberto Musacchio
on behalf of the GUE/NGL Group. - (IT) Mr President, ladies and gentlemen, it has become clear that the financial crisis has deteriorated into a terrible economic and now social crisis.
We can see this from the car sector, where, I agree with Mr Sacconi, we can presume that more than 2 million jobs are at risk. There is a danger that the crisis will result in redundancies, especially among the most vulnerable, that is to say older workers and those who lack permanent contracts. Swift, firm action is needed. Assistance is available, but we have to decide - and I say this quite frankly to the Commissioner - whether it should be coordinated at European level or otherwise, as certain larger states seem to be proposing.
I would argue that European coordination is required, and that it should be directed towards two areas: innovation, in relation to the climate change package and, if I may mention it again, to the Sacconi emissions regulation, and the social sphere. It is my belief that no worker, from the old to the temporary contractor, should be laid off. Innovation cannot be achieved by getting rid of the workers.
The European Globalisation Adjustment Fund should also be adapted in this light; likewise the European Social Fund - why not? - which currently speaks of creating new jobs but should also seek to avoid redundancies. Labour must then be restored to its central place in Europe, to play its due role as the founder of democracy.
Patrick Louis
Mr President, ladies and gentlemen, we are aware of the structural causes of the crisis in the automotive sector and its subcontractors. This sector, as was the case for agriculture and textiles, is suffering social, environmental and tax relocations and dumping.
What are we going to do when the Americans, as the dollar is falling, sell their gas-guzzling, subsidised and highly promoted 4x4s on our market, which is also under siege from bottom-of-the-range vehicles from Turkey, India and China?
There is a solution. We must re-establish the common external tariffs abolished by the Maastricht Agreements. Only compensatory duties at the borders of the European Union can re-establish a genuine and fair international exchange. Let us dare to do what common sense dictates before it is too late. However, as you know, Protocol 27 and Article 63 of the Treaty of Lisbon strictly prohibit any customs protection of the European market.
Ladies and gentlemen, let us be consistent. Let us no longer cherish causes which are so detrimental to us. Let us finally bury this damaging treaty and stop playing at pyromaniac firefighters.
Karsten Friedrich Hoppenstedt
(DE) Mr President, first of all, I would like to thank the Presidency, but also the Commission, for their very clear statements on this situation. I share Commissioner Verheugen's optimism that the motor industry has recognised the signs of the times and will find future-oriented solutions for many areas.
Of course, we live in the real world, however, and following a 5% fall in vehicle production over the last year, the industry is expecting a further 15% fall in 2009. That is the biggest fall in the European Union since 1993 and will mean 3.8 million fewer vehicles than in 2007. It is important to realise that for every job that is held in the motor industry itself there are another five in associated areas and industries that depend on it. That means that the financial crisis, clearly, has a particularly heavy impact on the automotive sector, as it affects both the manufacturers themselves and their customers. Both groups very much need better access to credit. The point has been made that the motor industry has access to EUR 9 billion from the European Investment Bank. However, both manufacturers and suppliers do need further credit in order to finance their businesses and so, too, do customers if they are to finance the purchase of cars. We therefore need to put our foot on the accelerator in order to shore up demand, as European passenger car registrations fell by 19% in quarter 4 of 2008, while those for commercial vehicles fell by 24%.
So far in this crisis, the banks have been backed to the tune of billions of euro in order to save the entire system. By and large, however, the motor industry's banks have been left out. As yet, these institutions have no access to State aid. Across Europe, as in the United States before it, the motor industry has had to reserve billions of euro for the residual balances on leasing accounts that are not covered. These losses - especially in the light of the 2 million stockpiled vehicles - are based on significant falls in the book value of leasing vehicles which then lead to problems in this respect, too. In other words, there is a need for very rapid action here in order to throw a lifeline to these banks, just as has already been done for the other banks within the system.
Stephen Hughes
- Mr President, Nissan has announced the loss of 1 200 jobs at its Sunderland plant in my North-East England constituency. That is about a quarter of its workforce, and to that will be added an as yet unknown number of jobs in its supply chain.
Nissan's Sunderland plant is widely acknowledged as the most productive in Europe. If the plant with the highest productivity in Europe needs to lay off a quarter of its workforce, then heaven help us when this crunch fully hits the less productive.
A recovery task force has been set up in my area involving all major regional actors. The measures they are planning - assisting job search, training and retraining, starting small companies, assisting self-employment - are all ideally suited for support from the European Globalisation Adjustment Fund. I welcome the Commission proposals to simplify that fund. It needs to be urgently simplified and mobilised on a massive scale as part of a coordinated European response to the crisis in the car industry.
Only a tiny fraction of that fund was used last year. Let us not hoard it. Let us put it to work to put our people to work.
Josu Ortuondo Larrea
(ES) Mr President, unlike many others, the car industry does not work on the basis of speculation but rather operates on fine margins that only turn into profit if many units are sold.
Of course cars are a significant source of greenhouse gases, but it is also true that the industry, in conjunction with its support industries, is responsible for 10% of European GDP and provides 12 million jobs representing 6% of employment in the Union.
For this reason it is a very important sector for the well-being of our citizens. We cannot abandon it to its fate and to the hard and fast rules of supply and demand; these are the very reasons why we now have this crisis in the financial sector and consequently in all other sectors, including the car industry.
We must look for support solutions that respect the principle of free competition in the European Union and which offer the necessary aid to save this manufacturing sector. For this we need a European framework to ensure harmonisation across all Member States. Multi-million-dollar aid has already been approved in the United States and other places. Furthermore, some countries have adjusted their exchange rates and introduced other mechanisms to become competitive in our markets.
We must therefore not be concerned with what the rest of the world says, but rather adopt the necessary measures without further delay.
Michael Cramer
(DE) Mr President, ladies and gentlemen, we will only succeed in fighting climate change and restructuring the world economy if we tackle the two together. What we need is a green New Deal.
The crisis in the car industry is not a purely economic crisis. The carmakers' slump is also the result of their bigger-faster-heavier philosophy over recent years. Until just a few months ago, General Motors, Daimler and co were focussing on gas-guzzlers, whilst their marketing made out that SUVs were the new city cars. They were quite simply ignoring climate change. That is coming back to haunt them now.
If we are now to make billions of taxpayers' money available, the terms must be clear. The car companies must use the money to switch to a smaller, more efficient range of products, to alternative propulsion systems - not only for the environment, nor merely for the climate, but also for the long-term security of hundreds of thousands of jobs.
I will give you an example from Germany, my home country, of how not to do it. In Germany, if the CEO of Deutsche Bank, Josef Ackermann, decides to scrap his nine year-old third, fourth or fifth car and buy a new Porsche Cayenne, he will receive EUR 4 000. This is neither socially nor environmentally-minded. In fact it is simply crazy. We must not go along with this.
Eva-Britt Svensson
(SV) Like many countries, Sweden, where I come from, is heavily dependent on the car industry. Volvo and Saab are well-known makes. The Swedish car industry has, like the rest of the car industry, been severely affected by the crisis. Several factors have contributed to this crisis, but one factor in particular is the failure to make the necessary switch in production at an early enough stage. The switch to the production of smaller, lower-energy and more environmentally-sound vehicles is necessary.
The EU has for a long time required a one-sided flexibility from workers. I and the Confederal Group of the European United Left/Nordic Green Left demand that we also impose the requirement for flexibility on the part of the management of the large undertakings. The lack of flexibility and new thinking has, after all, contributed to the crisis we are seeing in the car industry and in other industries.
Finally, I would like to say that the car industry is an important workplace, an often predominantly male workplace, and it has our full support. I trust that the EU will show the same level of commitment when we have a crisis and downturn in what can be considered to be female workplaces.
John Whittaker
- Mr President, you could have guessed what these reports would say. We have got a problem and the European Union has got to give its opinion. It has got to give the impression that it is in the driving seat to solve the problem. So we have a European Economic Recovery Plan of which the car industry is a part. But in reality each manufacturer is going to look after itself as best it can, and each country will look after its manufacturers as best it can.
There is of course a possible case for some support, some financial support to the car industry and other sectors to keep capital intact and to keep skills intact. But this can only be decided at the national level because the support - apart from the European Investment Bank mentioned by Mr Verheugen - can only be provided by national taxpayers.
But there is one thing that the European Union could constructively do here, at least until the recession is over, and that is to give car manufacturers a break from environmental restrictions. The industry is already in serious trouble. These environmental and other standard restrictions make cars more expensive. You are helping to kill off an industry which is already in serious bother.
Malcolm Harbour
- Mr President, yesterday in my home city of Birmingham we held a car crisis summit. I was sorry I was unable to be there because I started work in the automotive industry 40 years ago. I have been through many crises, but nothing like this.
There has never been a situation where sales have collapsed so quickly. I want to say to my Green colleagues that if they go and look at the unsold cars they will find that the smaller, lighter, greener models are of a higher proportion sitting out there. This is not a failure of business models: it is a failure of the whole economic system.
One of the statistics from our summit - from Professor David Bailey in our Birmingham Business School - estimates that 300 000 consumers in the United Kingdom were refused a car credit application over the last six months. Now some of them would probably have been refused any way, but that is the nature of what we are facing.
As regards some of the things we have talked about - and I agree entirely with what Stephen Hughes said about Nissan, and he knows them very well - we can do things at a national and a European level to help the industry through this restructuring. It is much better to help the industry keep those core people on the payroll and retrain them than to let them go and then to hire them back again later.
We have the incentives to invest in those new cars that Ms Harms and others want. The fact that the Greens are talking about electric cars as being a solution shows simply how out of touch they are with the real world - those are 10 or more years away, and we all know that.
The problem is actually getting buyers and demand back into the economy. We need to tackle credit; we need to help public buyers back into the market to buy the green buses, the green trucks, the green cars - after all, there will be things following through there. We do not want a competitive race between businesses. Mr Vondra was absolutely clear that this is a single market, and we do not want competitive activities there.
But, above all, we need to face up to the fact that the car dealers have to be out there selling and looking after cars.
My final point is to you, Commissioner, and you talked about Ms Kroes working on this earlier: please tell Ms Kroes to take off the table this entirely unwanted and destabilising proposal to change the whole structure of dealer contracts. Nobody has asked for it, and we do not want it.
Monica Giuntini
(IT) Mr President, ladies and gentlemen, we have heard the commitments of the Council and the Commission, but I would remind you that the overall drop in sales in this sector in 2008 was 8%. There are now thousands of workers who have lost their jobs and are reliant on unemployment benefit. Mr Sacconi gave us the statistics earlier.
This concerns not only the large car firms, but also all businesses associated with the car industry. I am thinking of Tuscany, where I come from. As I have had cause to mention recently, according to the European Association of Automotive Suppliers, one in ten companies will be at risk of bankruptcy in the coming months. I therefore believe that swift, assured and realistic intervention is needed, and I know that Mr Verheugen will be attentive and sympathetic.
There is no time to lose, Commissioner. Coordination between European countries is essential; otherwise we run the risk of ending up with a scattering of different measures that fail to bear fruit, either for the EU economy or in terms of support for workers. We must have incentives, coordinated at European level, such as those Mr Sacconi mentioned, that allow investment in clean cars and support for research and new technologies. We must act immediately to review the criteria of the European Globalisation Adjustment Fund to be used to support European workers, and I believe that more funding is needed, from ...
(The President cut off the speaker)
Ivo Belet
- (NL) Commissioner, the rescuing of the European car industry is threatening to degenerate into an anti-European chronicle. Every Member State is doing its own thing and launching national support measures. There are Member States - as you know better than we do - that promise cheap loans for car manufacturers, provided that these car manufacturers buy parts from local suppliers in that country. This, of course, is completely mad, and it is good that you stated here a few minutes ago that you will not tolerate this and intend to clamp down on this practice.
What manufacturers need today - as Mr Harbour has already stated - is measures today and investment support for the future for new environmentally-friendly and hybrid cars. That is all well and good, but it does not solve today's problems. That is why it comes as very good news and as a ray of hope that the Czech Presidency is announcing a new initiative here today ahead of the forthcoming Spring Summit, namely a proposal to implement a measure across Europe that would provide a dramatic stimulus to the purchase of environmentally-friendly cars.
In addition - and this is nothing new - there is a need for fresh credit and credit guarantees for car manufacturers. The European Investment Bank has freed up a considerable amount of money, but much more is needed to get through this difficult time. In many cases, the companies in question are SMEs in the supply industry that need credit now in order to survive.
On a slightly different note, Commissioner, we should also seize on this crisis as an opportunity to finally force a breakthrough in the area of car tax. We have been squabbling for years about the Commission proposal to adjust car tax. The time has come to finally make the switch right across the European Union and transform car tax permanently into a system in which those consumers who opt for environmentally-friendly cars will be rewarded for doing so.
Mia De Vits
- (NL) The car industry is a very important sector for employment in Belgium. In and around Opel Antwerp Belgium, there are 2 700 direct jobs on the line today. The decisions are taken in Detroit, and all Opel sites are faced with overproduction. Needless to say, the relevant authorities are ready in the wings with rescue packages consisting of State aid and bank guarantees. To ensure that this aid is effective, though, I would urge the European Commission today, in the form of Commissioner Verheugen and your colleague Mrs Kroes, to sit round the table with the authorities and the sites involved to secure a maximum number of jobs at European level and to guarantee a coordinated approach at European level before 17 February, the day on which the decision will be made in Detroit. This is to be done, as you said yourself, in order to prevent a race amongst the Member States to enact protectionism.
Marie-Noëlle Lienemann
(FR) Mr President, Commissioner, ladies and gentlemen, we must revive the great industrial policies on which the European Union was founded. This was the case for coal and steel.
The strength of these policies lay in the fact that that they were modernisation tools - as must be the decarbonisation of the automotive sector - while, at the same time, being social policies for the support, defence, training and protection of employees. Therefore, I would like to put forward four proposals.
Firstly, the creation of a European Support Fund for Employees in the Automotive Sector that exceeds the Modernisation Fund because it is important to retain employees in companies during these crucial periods by supporting their level of remuneration in the event of short-time working and by supporting their training within the company. We cannot be content with hypothetical retraining of employees who have been made redundant.
Secondly, we must create an agency for innovation and accelerate the funding of research and development in order to advance very quickly and close the technological gap between clean vehicles and safe vehicles.
Thirdly, accelerate the renewal of the vehicles on the road. Premiums for scrapping vehicles can be effective. They need to be harmonised at European Union level in order to avoid the effects of unhealthy competition.
However, I would like to close on this point. I fully understand the meaning of the word competition, but it is also necessary...
(The President cut off the speaker)
President
Ladies and gentlemen, it is now time for the President to receive additional requests to speak but we have a problem as many Members have requested the floor. I am therefore going to adhere very strictly to the Bureau's decision to give the floor to five Members. They will be automatically cut off as soon as the minute assigned to each is over.
Rareş-Lucian Niculescu
(RO) Amidst all the debates about the crisis in the car industry and the decisions which will arise from this, we must not overlook the problems for car component producers. They, in turn, have been affected by the crisis as a result of the domino effect because they are at the mercy of the customers' production stoppages.
In Romania, for example, there are more than 400 companies involved in producing car components, which achieved a total turnover in 2008 of EUR 8 billion. Three-quarters of these companies are small and usually work for a single customer. This is why the effects of the crisis are being felt extremely hard. In these circumstances, companies need to resort to redundancies or find solutions such as reducing working hours or giving unpaid leave. Tyre manufacturers are just as severely affected.
Bearing in mind the large number of employees within these companies, I feel that car component and tyre manufacturers must be included in any future solution for providing economic support during this crisis.
Matthias Groote
(DE) Mr President, Commissioner Verheugen has just set out for us how dramatic the figures are and what the current situation is in the automotive market. Dramatic events, then, require harmonised action. In 2006, we, in the European Parliament, launched an own-initiative report on the harmonisation of vehicle tax, which we hoped would be based on CO2 and consumption. I believe that this would represent an economic programme through which the Council could show, as one - as this would have to be decided unanimously - how consumption-based vehicle taxes could be brought on-line.
With regard to what my colleague, Mrs De Vits, was talking about, which is to say General Motors, I would like to ask the Commission whether it is taking precautions for the eventuality of the collapse of the parent company. In such an event, would the Commission act harmoniously to find a European solution for General Motors' subsidiaries?
Zbigniew Krzysztof Kuźmiuk
- (PL) Mr President, I would like to draw your attention to three issues in this debate.
The governments of European Member States are providing automobile manufacturers with significant financial support, amounting to tens of billions of euros. The German Government, in addition to supporting German manufacturers, has decided to assist vehicle users. Anyone who decides to send their old car to the scrap yard will receive EUR 2500.
The European Commission, which has, to date, strictly monitored compliance with the rules for providing State aid to companies, has been very quick to grant its consent in all these cases, generally adapting its decisions to earlier decisions made by Member State governments concerning these matters.
Without calling into question the principles behind the action taken to aid the car manufacturing industry in Europe, I would like to once again remind you of how painfully unfair the European Commission's decision, namely that State aid given by the Polish Government to Polish shipyards must be repaid, was. As a result of this decision, around 50 000 jobs are now being cut in the Polish ship-building sector itself, while over ten thousand jobs will be lost in related industries in the future.
Zita Pleštinská
- (SK) Commissioner Verheugen, the European Commission must take concrete steps towards getting the automobile industry back on its feet. First and foremost, we must prevent distortions of the internal market. The protective measures proposed by some states are no way to tackle the current crisis. I call on the Commission to submit measures for a European scrapping scheme as quickly as possible.
Mr Vondra, I expect from the Council that the Member States during the European Council's meeting in March will approve a scrapping scheme that will directly boost the purchasing power of consumers intending to buy new cars.
I firmly believe that if the EU wants to be the largest exporter of cars and at the same time wants to be a global leader in the fight against climate change then it must help its car industry, which is the largest private investor in research and development. Through funding research and development, through supporting investment...
Ivo Strejček
- Mr President, I was listening to the debate quite carefully and I am not going to bring forward anything new. I would just like to stress a few remarks that were made, which in my opinion should be overarching the whole debate.
I refer to Mr Vondra's words that we should take care to take into account fair competition and we should avoid market distortion, and the Commissioner's remarks that we should be fair and not raise false expectations. Above all, Commissioner, thank you for saying that we should allow our manufacturers to be more flexible through less regulation, less law and less exorbitant bureaucracy.
President
Let me take 30 seconds to explain the rule established by the Bureau to you, because I recognise that it is most disagreeable for Members to request the floor but not to be given it.
The Bureau decided that the fundamental debate time is that assigned to Members who speak using the time allocated to the different parliamentary groups. Subsequently, in the 'catch-the-eye' procedure, the floor is given to five Members for one minute each, in order from the largest to the smallest group. However, if there are six requests, and we have six minutes available, they can all be heard. It can be stretched to six minutes, possibly seven. However, in this case, 12 Members requested the floor. Only five of them had their request granted, as laid down by the Bureau for this point in the debate. I am clarifying this so it can be taken into account on subsequent occasions.
Mr Vondra now has the floor to respond to the various speeches on behalf of the Council. Minister, you have the floor.
Alexandr Vondra
President-in-Office of the Council. - Mr President, I should like to thank Members for a very useful debate. The Council appreciates all your contributions to the debate and will try to do its best to play its part, with the Commission, in fixing as many problems as we can in the automotive industry.
There is no doubt that there should be some short-term measures, and they are already happening at Member State level. So I think we are in agreement that those measures must be realistically sustainable financially, as well as in other respects. They should be targeted, effective and, most of all, must be carried out in a way that would be compatible with the strict state aid rules under Community law. I informed you, for example, of our initiatives regarding the scrapping scheme; so it is really important that the steps being taken are in conformity with the competition and state aid rules and avoid distortion of the single market.
My second point is that we should still bear in mind that the European automobile industry leads the world - we are exporters, those who are producing the cars - and, in this light, we should bear in mind the need for maintaining the long-term effectiveness, as well as the competitiveness of this industry. So the measures being taken must fulfil certain criteria regarding the long-term viability and competitiveness of the European industry, including investment in innovation and clean cars etc.
So the Council is making all the necessary efforts to ensure that all those efforts for RTD and innovations in the automotive industry, but also short-term measures in this report, are fully coherent with the overarching goals of the Lisbon Strategy.
My third point is that we must follow developments outside Europe. We are certainly aware that the crisis in the US automotive sector is structural and deep, and US producers are in a much worse position than European car makers. So it is obvious - and Günter Verheugen mentioned this - that the US cannot allow its automotive industry to simply die, because it would not be beneficial for us.
But we still have to work politically with our international partners, in particular through the WTO, in order to ensure that a level playing field is maintained as far as possible. The same applies to the other automobile makers and industries in Asia. We are also watching developments in Korea and Japan etc.
We are now in the run-up to the Competitiveness Council, which will take place in early March, and we hope to produce a high-quality and, of course, consensual decision for the European Spring Council, which will deal mostly with economic issues.
Günter Verheugen
Vice-President of the Commission. - (DE) Mr President, I agree with what a lot of speakers have said, in particular Mrs Harms. The short-term measures that we are now putting in place must in no way run counter to our long-term goals. That is the bottom line.
As you have been so nice, I too will now be nice and say something that will definitely please you and that I said here back in 2006, namely that the future of the European motor industry will be a green one or this industry will not have a future in Europe. Let me make that quite clear. People can argue about whether the choice of models produced by European manufacturers, especially the German manufacturers, was responsible for the crisis we are now in. I do not know. There have been environmentally-friendly cars in the past, and low-consumption models too - think of Mercedes' Smart car, which led to billions in losses for the company. It is not quite as black and white as you might think, therefore. From an environmental point of view, the choice of models was clearly wrong and the fact that the changeover is being made now, in a crisis, does not make it easier, but that does not change the fact that this changeover is necessary and needs to take place quickly. On this point, then, we are in complete agreement.
A tariff barrier against cars from the US, Mr Louis, is definitively not something that we will be introducing. If there is one thing we will not be doing, this is it. American cars play no real role in the European market, whereas European cars play a large role in the US market. If there is a voice here in the European Parliament calling for us to protect our market against American cars, I fear that there will be a voice in the US Congress in Washington saying that they should protect their market from European cars. Our position would not look too good in such a situation. I would ask you in all seriousness not to pursue this idea any further.
I can only lend my complete support to what Mr Groote had to say about vehicle tax. I also thought that the pointed observations made specifically on this topic were sound. The reshaping of vehicle tax according to a CO2-based principle is something the Commission has been calling for for some time and it saddens me that progress in this matter has been so sluggish.
Mr Groote, you will understand that I cannot express any public view about the question you put to General Motors and Opel. You will have to make do with me saying that we are keeping a very close eye on this development and we are in discussions with all the relevant parties.
I would also like to make those people who have quite rightly put particular emphasis on the employment issue aware that the Commission has, in fact, already tabled a proposal on how the European Globalisation Adjustment Fund can be made more flexible and effective. If the Commission's proposals were implemented quickly and rapidly realised - and I would issue a pressing request to all of you to do that - we would be in a position to provide help, in particular, for temporary workers in the motor industry and unskilled workers, who are ultimately the ones at the front on the cliff edge.
The rules for the scrapping premiums - this has been addressed numerous times and I would like to say it one more time - are clear cut. There cannot be a European regulation forcing every Member State to take part in this. That is absolutely impossible. Similarly, there can be no European regulation that the level of the premium must be the same everywhere. The reference values must be laid down at European level, and that is the case. We agreed on this at our meeting of 16 January in Brussels.
Finally, I would like to emphasise, once again, what many of you have said, which is that we must think beyond the motor industry when we discuss the current crisis. It is, in fact, absolutely right to say that intelligent traffic systems, intelligent traffic management systems, cutting-edge, innovative solutions for the personal and mass transit of the future must be found and that this crisis perhaps offers an opportunity to push such solutions forward more strongly. Personally, at any rate, I would very much like to see that happen.
Christoph Konrad
(DE) Mr President, you have just made a statement about the Bureau's decision, explaining why the 'catch-the-eye' debate system has been changed. In this regard, I would like to make a formal protest against this change. This procedure was introduced in order to invigorate our debates, to generate dialogue with the Commission and to strengthen the debating culture. What the Bureau has now decided is completely counter-productive and I would like to ask you, please, to bring this matter up at the Conference of Presidents and to answer this protest.
President
Yes, Mr Konrad, of course you have every right and we take note of your protest. However, you belong to a very responsible group in this House and you will understand that what cannot happen is that individual Members have more time than the groups. The groups have a statutory responsibility to participate in the debates.
The Bureau took this decision unanimously. I consider this to be a common-sense decision, precisely to prevent Members who have not been put forward by their group - because the group does not want them to speak at that time - from speaking afterwards. That is why the time has been restricted: five minutes for five speeches, in order from the largest group to the smallest, while also making sure that not all the speakers are the same nationality.
That is what was decided. Of course, this rule can be changed. If the Conference of Presidents proposes a change in the procedure to the Bureau, the Bureau will consider it with all due care.
Thank you very much, Mr Konrad, for your contribution; it has been well noted.
The debate is closed.
Written statements (Rule 142)
John Attard-Montalto  
in writing. - I would like to draw attention to the fact that the economic crisis in the car industry in the Maltese Islands is being compounded because of a serious administrative blunder. Cars in Malta are subject to a heavy registration tax, on which the Government was also collecting VAT. It has now been established that the Government was appropriating money from thousands of car owners which was not due. The Government is refusing to reimburse thousands of vehicle owners who have paid substantial amounts when these were not due.
The Government of Malta is claiming that reimbursement will amount to millions of Euros. It is exactly because of this that the Government has a duty and an obligation to return taxes irregularly imposed. This is such a serious blunder that if it happened in any other member state of the EU, the Government would have been forced to resign. In Malta the Government has not even had the decency to accept responsibility and apologize to the thousands of Maltese and Gozitans who have been affected. Solutions could be found by offering rebates to the owners of these vehicles on such issues as annual licences. It appears that the Government is completely deaf to any such suggestions.
Sebastian Valentin Bodu  
If we look at the European Union as a living organism, the European car industry is its backbone. It accounts for 3% of the EU's GDP and generates a commercial surplus of EUR 35 billion. However, 2008 was a difficult year for this industry, where during the first half of the year, car sales dropped due to a rise in the price of fuel, while during the second half, sales fell by 19.3% as a result of the financial crisis.
These are not the only problems which this sector is facing. Between 2009 and 2015 the car sector must implement new standards for polluting emissions, fuel economy and so on, while all of this is adding billions of euros to the industry's costs.
The figures given above are also relevant because the car industry provides for the incomes of more than 12 million families. One job in a car company is linked to another four jobs at suppliers and another five in related sectors and sales. It is therefore clear that the health of this sector of the European economy is vital to the EU economy as a whole. In these circumstances, rapid, coordinated intervention by European governments and institutions is an absolute must, such as introducing programmes for returning old cars against a consistent reduction in the purchase price of a new one, financial assistance and so on.
Elisa Ferreira  
The financial crisis has paralysed credit; it has affected businesses and families; and demand has plummeted, with disastrous consequences for economic growth and employment.
Such a situation justifies exceptional measures, particularly in the case of strategic sectors such as car manufacturing, which represents 6% of jobs.
Even so, almost all the European Economic Recovery Plan, for which I have the honour of being this Parliament's rapporteur, is based entirely on national initiatives.
In reality, how can the Commission guarantee that it is out there checking coordination and that countries are not embarking on a war of support measures?
What mechanisms are out there to safeguard jobs in countries that do not have the financial structure to guarantee the jobs that are vital to them?
For some countries, textiles or electronics may be just as important as car making. What action can be expected?
Will the Commission be more alert to the role of European industry in Europe's survival?
There are limits to what can be expected from the European Investment Bank. Will we have a budget equal to the challenges facing Europe?
Krzysztof Hołowczyc  
The European Union's economy is reputed to be the greatest economic power in the world. On the one hand, this makes us particularly responsible for any action taken in terms of our internal market. On the other hand, a global economy, with the Union at its forefront, has specific consequences. One of these consequences is that it is difficult to define which car manufacturers are truly European. Numerous company mergers, the creation of global manufacturing groups and the presence, for a number of decades, of American or Asian companies on the European Union's internal market, have provided the foundations for a diverse and competitive European car manufacturing sector.
It seems right that our efforts to create a European Economic Recovery Plan, should be primarily guided by the principles of the free market and its competitiveness. We should also remember that the motor industry, which has been so badly affected by the financial crisis, is one of the many links in the chain of the European economy. This induces us to adopt the plan of action proposed by the Presidency, namely that of drawing up a general approach, involving all the stakeholders on the internal market.
This approach should stimulate market demand, which determines the state of the economy. The mechanism for providing aid should also make use of money earmarked for targeted investment in technological innovations, in accordance with guidelines for improving road safety and environmental protection.
Alexandru Nazare  
The economic crisis has had a powerful impact on the car industry, a sector which makes a significant contribution to the GDP of many European states. Even though the EU does not have any direct intervention mechanisms, Member States must be allowed to take the necessary measures to prevent the collapse of an industry on which the jobs of thousands of European citizens depend. The Romanian car industry has also been severely affected by the crisis. I only need to mention the cases of Dacia Renault, which is restricting its activities, and Ford, which has requested support from the Romanian state.
The serious situation at European level requires the immediate introduction of suitable measures. I am not referring, in this instance, to protectionist measures, which distort the market, but to measures which offer equal opportunities to European industry and allow employees in this industry to keep their jobs.
It is not enough for us to take action nationally, as we need to act at European level too. The economic recovery plan allows this to happen because it proposes new credit regulations in the European banking system which facilitate access to credit. It is also important that the State aid schemes which Member States apply for can be accessed rapidly and easily. This is a key aspect for strategic investors, such as those in the car market.
