* European Investment Bank funding for research
* Draft report says EU 2020 car, van CO2 standards feasible
* Status quo has to change, capacity has to be adapted
By Barbara Lewis and Francesco Guarascio
BRUSSELS, June 5 Europe's industry chief on
Wednesday is expected to announce plans to galvanise the
region's struggling car industry, focused on innovation, low
carbon emissions and using trade negotiations to ward off
competition from emerging markets, EU sources said.
European Industry Commissioner Antonio Tajani could please
environmentalists by emphasising smart regulation for a
sustainable industry, but is likely to disappoint those in the
car industry who have called for more relaxed rules to help them
cope with financial downturn.
Such finances as there are will be from the European
Investment Bank, the EU sources said, to help with the
unprecedented amounts needed for research and innovation,
including a shift towards electrification of vehicles.
All major car makers except Volkswagen lost
money in Europe last year. Withering sales mean the industry,
which directly and indirectly provides a total of more than 12
million jobs, has at least 20 percent more factories than
needed, according to analysts and industry executives.
Competition from emerging nations is aggressive. Since an EU
Free Trade Agreement with South Korea began to take effect in
July 2011, 150,000 extra South Korean cars have taken to
Tajani is not expected to ask for a renegotiation of the
South Korea deal, but he is looking for a stricter regime for
the Japanese and Indian car sector.
"We need a less naive trade policy and we do not consider it
a good idea to sacrifice the car industry. We consider it's a
particularly innovative part of our manufacturing sector and to
lose capacity would be to lose competitiveness," one of the EU
"We favour fair access to markets. We would be very happy to
get an agreement with India and Japan."
Tajani will speak on Wednesday at a Brussels meeting of CARS
21, a policy group, which gathers ministers from EU member
states, auto executives, EU commissioners, and trade union
It has drawn up a report on the "competitiveness and
sustainable growth" of the car industry over this decade as part
of the debate that will feed into the EU legislative process.
The European car-makers' association ACEA and some of its
members, including PSA Peugeot Citroen and Fiat
, have called for EU-wide measures to tackle
A draft of the CARS 21 report seen by Reuters states only
"current capacities will have to be adapted, new production
methods devised" as the status quo cannot be maintained.
It also notes the "lasting effects of the crisis" are likely
to be most lasting in the European Union as the United States
took radical steps to restructure its industry.
"In the EU, the remaining overcapacity is likely to hamper
competitiveness of the industry in several member states."
Media reports have said the EU would soften its stance on
car emissions to shield car-makers from rising costs.
EU sources said this was not the case and the CARS 21 report
seen by Reuters says EU 2020 carbon standards for cars and vans
are "technically feasible".
In 2009, the EU adopted rules that require car-makers to cut
average car emissions to 130 grams of CO2 per kilometre (g/km)
Car-makers are on course to meet that, and the bloc has a
non-binding target of moving to 95g/km by 2020.
That has been surpassed by the United States and China and
Japan are catching up fast, while debate has begun in Europe on
whether to make the 95 g/km target legally binding, with
Commission proposals expected later this year.
The industry is divided. Some have said new binding carbon
standards would be "extremely challenging". Others say they are
achievable and a competitive advantage.
Green campaigners are unanimous that the right kind of
regulation is the way forward.
"Strong, smart, effective regulation is a key driver of
innovation. It will enable the European motor industry to retain
its technological lead, boosting green jobs especially in the
car industry's supply chain," said Greg Archer, programme
manager for non-governmental organisation Transport &
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(Additional reporting by Charlie Dunmore; editing by Gunna