HomeBusinessEurope's top five automakers more than double their profits since 2019

Europe’s top five automakers more than double their profits since 2019

Europe’s top five carmakers have more than doubled their profits since 2019 despite saying they cannot afford to meet planned EU pollution rules, an analysis reveals.

The “big five” of the European automotive industry (BMW, Mercedes, Renault, Stellantis and Volkswagen) collectively made 64 billion euros in profit by selling fewer cars, but at more expensive prices, according to the Transport and Environment (T&E) study. ), a green company. group of experts

But the five companies, which this year are paying out 27 billion euros in dividends to shareholders and share buybacks, argue through their trade association that detoxifying car exhaust emissions would cause car prices to drop. shoot up to 2,000 euros.

CEO pay at auto companies has also skyrocketed. VW was the only one of the Big Five auto companies yet to increase pay for its top executives since 2019, but at the other four companies surveyed, CEO pay rose between 22% and 103% over the same period. period, according to the report. The average salary increase for a CEO from the big five during the three years of pandemic, war and inflation was 50%.

Europe has introduced a series of measures, the “Euro 7”, to reduce the annual number of 70,000 premature deaths in Europe due to road emissions, and would cost between 90 and 150 euros per car according to figures from the European Commission. Globally, air pollutants such as particulate matter (PM2.5) and nitrogen oxides (NOx) are responsible for 6.7 million premature deaths and more than a million stillbirths each year, as well as respiratory diseases. , dementia and mental illness.

But earlier this month, Volkswagen asked for the start of the Euro 7 scheme to be delayed, due to its preparation time and expense. Dirk Ameer, a Volkswagen spokesman, said the proposal would drive up prices and “result in lower sales, longer retention periods for older vehicles and slower fleet turnover. [and] it could even negatively affect air quality. No change, especially in [the] At the time of the Euro 7 proposal, the lack of engineering time will lead to significant production and job losses across Europe. This will affect all production sites in Europe and all classes of vehicles.”

According to T&E, the cost of limiting the company’s toxic tailpipe emissions would amount to a maximum of €5.7 billion over the life of the regulation, or 37% of its profits in 2022.

Anna Krajinska, T&E’s manager of vehicle emissions and air quality, said: “We don’t envy automakers their record profits, but claims that they can’t afford cheap solutions to pollution are simply corporate greed. The auto industry is maximizing profits by selling more expensive premium vehicles, while at the same time pretending that pollution regulations would make cars unaffordable. EU lawmakers must put public health before industry money grabs.”

Although they collectively sold 25% fewer cars in the years after 2019, Stellantis and BMW respectively doubled and tripled their profit margins in these years as an industry-wide shift from “volume to value” took hold. to power premium vehicles like SUVs. At the same time, smaller and more popular models such as the Fiat Punto, VW Beetle and Citroen Picasso were scrapped.

The average price of a new Mercedes is now 43% higher than in 2019, while the company’s €14.5bn profit last year was 600% higher than in 2019, according to the study, which is based on company data and Bloomberg terminal.

Danish Socialist MEP Christel Schaldemose told The Guardian: “From day one, the industry has rejected tougher pollution standards, arguing that they are too expensive and that the price of affordable cars would be higher. We now know that this is not the case and that they are instead putting money in the pockets of their shareholders at the expense of cleaner air.”

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However, a spokesperson for the European Automobile Manufacturers Association said: “Despite having minimal environmental benefits, the proposal risks putting unnecessary financial pressure on consumers and diverting investment away from zero-emissions technologies. According to estimates by some manufacturers, the average consumer price of a new car could increase by €2,000. This higher cost is primarily due to test frame conditions, including deliberate and continuous driving in extreme conditions.”

The Guardian has reached out to the car companies for comment. A VW spokesperson said: “Volkswagen Group supports the ambitious climate and air quality targets of the German government and the European Union. We welcome the clear direction taken by the EU Commission with the Fit for 55 program and the goals of CO2 regulation.”

The Euro 7 benchmark, which would apply to some 100 million vehicles before the EU ban on conventional engines takes effect in 2035, would tighten on-road emissions testing and continuously test emissions with systems control on board.

Its predecessor “Euro 6” dates from 2014, before the Dieselgate scandal. Volkswagen has since paid 31 billion euros in fines and settlements after using “defeat devices” to cheat the emissions tests of some 11 million cars between 2009 and 2015.



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