No movement in 2019 CO2 emissions – Electrifying drop on the horizon however.
From a glance, recently published 2019 European passenger car CO2 fleet emissions data from Germany’s top passenger car manufacturers appeared disappointing. The scorecards read; “disappointing”, “must try harder” and “bottom of the class”. Both Volkswagen Group and Mercedes-Benz Cars (Smart/Mercedes) both recorded year-on-year increases in their fleet average CO2 emissions over the previous year – with Mercedes-Benz recording its third successive annual increase – while only BMW Automotive (BMW, MINI and Rolls-Royce) recorded a minor 1g/km reduction over 2018 levels to 127g/km. However, dig a little deeper, and this trend becomes a little more logical...
Glancing over recently published European CO2 data, courtesy of manufacturer's own reporting, Germany's passenger car OEMs appear to have missed the memo about upcoming changes to EU CO2 compliance targets. Last year it appeared that they more or less all continued with business as usual, stocked to the rafters with profitable, PS-packed, premium, autobahn power machines. However, behind the disappointing 2019 data lies a logical explanation. With 2019 marking the last year the EU CO2 target remained at a weight-based average of 130g/km – in place since 2015 – manufacturers' emissions levels were expected to remain high as the most profitable and consequently higher emissions models were pushed at full speed. In a final unpunished swansong, high-emitting and profitable models remained priority while EVs were pushed to the corner of the forecourts. The benefits to manufacturers for selling low emitting plug-in models from a bottom-line business perspective will take priority from 2020 in assisting in reducing CO2 fleet averages and help avoid crippling fines once the new targets are introduced. This consequently resulted in a number of automakers such as Renault – as confirmed by interim CEO Clotilde Delbos – holding back full Zoe supply last year and pushing deliveries to 2020.
A change to the Mauls (financial punishment for purchasing higher emission vehicles) in some markets, namely France, contributed in a sprint finish for high emitting models at the tail end of last year also. This impacted 2019 CO2 averages negatively further. From 2020 however, in markets such as France that have imposed Malus’ as high as the sticker price of a small, to medium-sized car, just for the pleasure of purchasing a high emitting vehicle, high PHEV take-up rates for these models are likely to be witnessed. To remain on golf course premium badge boasting terra firma, but without that added crippling Malus cost to boot, as the year progresses PHEV uptake for these types of vehicles in Bonus Malus markets is likely to increase further.
Buoyancy aids in place to assist premiums in reaching the CO2 shore
From 2020 the tougher weight-based 95g/km CO2 fleet average emissions target from the outset appears at best tough, to near enough impossible, for the car makers such as BMW and Daimler to achieve. Many commentators have been quick to calculate the fines they will have to pay for missing these levels rather than calculating how they will remain compliant.
Minus 20 per cent is the magic number
However, as the targets are weight-based, and due to the above-average fleet weights from all three German manufacturers, their targets are set above 95g/km with both Daimler and BMW Group expected to see compliance levels set above 100g/km. Both Daimler and BMW recently stated that they expect to see falls of around 20 per cent in their CO2 fleet average emission in 2020 over previous year levels to meet compliance. A 20 per cent fall from Daimler, for instance, would see a fall to around 110g/km from 137g/km in 2019, which is likely to be achieved by a significant increase in its PHEV mix penetration as well as fully electric Smart vehicles, included in its calculation. If Daimler decided to use its total super-credits quota of 7.5g/km – which can be used at any time up to the end of 2022 – in 2020, this would drop that value to 102.5g/km and meet compliance levels.
2020 95% phase-in
Both BMW Group and Daimler can effectively reach targets with 2020 aveages north of 110g/km in 2020 and still remain compliant. Thanks to the worst 5 per cent emitting vehicles in the fleet permitted to be omitted from the average fleet total as part of the so-called phase-in year all of a sudden the targets don't appear all that utopian.
The Great Escape With this all taken into consideration, compliance in 2020, despite appearing a tough ask, doesn't quite seem such an impossible mission anymore. For some manufacturers it will be close, while for others the famous theme tune from The Great Escape will no doubt be heard being whistled down the long corridors of Germany's passenger car headquarters.