Fewer models produced as EU CO2 targets add pressure
Drastically reducing average fleet emissions is now a priority for automakers if they want to avoid heavy fines.
This year will mark a revolution in New Auto Sales: for the first time, automakers place each CO2 model's output in its ranges at the top of their priority list, outweighing design, performance and other traditional selling points.
In the EU, 95g/km CO2 fleet medium regulation is under discussion in Brussels for ten years, meaning every carmaker faces hefty fines from 2020 if they don't hit the target.
With such lengthy preparation, car manufacturers have at least had a chance to develop low CO2 technologies, but most have only spurred improvements over the past couple of years - and fresh and in 2020 we have already seen automakers reshuffle engine combinations in the model line and are rushing to introduce with low CO2 models.
Ford, for example, is undercutting the 2.0 and 1.5-liter petrol engines from the C-Max and Mondeo and will drop the eager Edge SUV from its range. Meanwhile, Volkswagen and Skoda have canned the most polluting 2.0 TSI petrol engines from large SUVs.
In fact, data from Yato's car dynamics suggests that around 184 models were trimmed from the 7345 options listed on UK price listings in November 2018 - a small percentage but an unusual reverse in the industry more often used to expand the range.
Interestingly, there is also evidence that the queues for some models are unusually long as car manufacturers throttle off power, especially passenger cars like hot hatchbacks with high radiating powerful engines, because the result is very heavily overruled.
Last month, the Financial Times reported that Mercedes dealers are expecting to have stock of the most polluting AMG models capped at 7,5% in 2020.
There are also speculations that automakers have been stuffing their distribution centers with low-CO2 and zero-emission models ready this month, but won't make them available to customers in 2019.
“We have suspicions that some electric car batteries were built in 2019 and have stock ready for sale this year,” IHS Markit, analyst Colin Couchman, told the car. "There's a mismatch between build rates and delivery numbers."
Why do automakers do this? By 2020, to speed up the introduction of battery electric models, they may qualify for super-credits under EU regulation (actually they count twice as against the average automaker), making it easier to achieve their goal.
There are also UK-specific incentives. For example, electric car batteries are at zero rate for Bik (good in kind) taxes for two years from April 2020. So, a company driver car – for example, in the Mercedes C220d AMG line saloon, which switches to Bev in April – will save £2381 a year in tax alone. “These changes to the company's UK car taxation are set to give Bev and Plug-in a significant boost in the UK,” says Matthias Schmidt, a Berlin-based consultant who specializes in low-carbon technologies.
In the spring, Ford, for example, is launching a 1,0-liter 48V mild-hybrid Fiesta and a focus model in time for a new company, car tax rules cutting CO2 down to 106g/km per focus. Expect a lot of similar announcements from other car manufacturers through 2020.
There is a significant switch in determining manufacturers to hit their EU target - the prospect of big fines is a clearly focused mind. This is despite three trends that have driven up mid-sized fleets into the run-in January: increased sales of SUVs, declining demand for diesel fuel and a move to tighter WLTP regulations.
BMW and Ford, which, along with JLR and Volkswagen in the Lower Five PA CO2 study consultancy last year, are now openly saying they have achieved their goal. Mercedes, also in the bottom five, says it's his "goal" for this. “This will require a high level of electrification and while the 2020 target could be reached in 2021, there is a risk of three automakers being penalized,” the report says.
T&E published a report in September that highlighted four strategies automakers could take and, depending on how they are introduced on individual models, these will affect the chances of hitting the target.
Whatever happens, the challenge from the bosses of the company to get the right combination of low CO2 models is their new challenge. This year, car buyers can expect lineups to evolve with a focus on hybrids, plug-ins and electrifications rather than light cars with powerful engines.
How EU rules work
The heading figure is 95 g/km. But in the course of political bargaining, in Brussels, as these figures were agreed upon, Germany and England managed to change the situation so that weight was taken into account - making it possible to work for heavier luxury cars as well as lighter ones.
As a result, Fiat Chrysler cars, with a range dominated by small cars, has a target of 92g/km in 2020, while BMW's is 102g/km.
But Autocar understands this figure will change for 2021. This is also when the exception for the top five percent of sources expires.
Each company builds an average of CO2 targets calculated for individual models and based on a mass of 1379.88 kg (pro weight of the BMW 1 Series).
Formula: CO2 target = 95 + [0.033 x (model mass - 1379.88 kg)]
Taking a model such as the BMW 116D SE, which weighs 1440kg, its CO2 targets are: 95 + [0.033 (1440 – 1379.88)] = 95 + [1.98] = 97.0 g/km. The 116D is valued at 111g/km, thus subject to a fine of €95 (£81) in g/km over the target, per vehicle sold.
The lightweight 1100kg but 120g/m Volkswagen pre-GTI is a particular underdog, facing a fine of around €3252 (£2771) per car.
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