Automotive manufacturers have urged the European Union (EU) to restore the functioning of the financial markets as they forecast production would drop 15% this year.
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“The vehicle industry, in particular, needs significantly broader and quicker access to financial support through the European Investment Bank as part of a broader set of measures to survive the economic turmoil, ensuring innovations in low-carbon technologies and maintaining the high-skilled workforce Europe needs,” the European automakers’ trade association ACEA said in a statement.
“2009 will be a decisive year for our economies and for our industry. The automotive manufacturers are taking all measures within their reach to emerge from the crisis. In parallel, governments have to take urgent and drastic measures to prevent a prolonged period of recession”, ACEA president and Renault CEO Carlos Ghosn.
“We believe it is time for Europe to take the lead by designing and deploying instruments that are critically needed in this time of crisis. A coordinated European policy would not only ensure more fairness and greater respect for EU competition rules but – more importantly – greater efficiency in a single, European market.”
Ghosn on Tuesday met in Brussels with European Commission vice-president Günter Verheugen and competition commissioner Neelie Kroes to discuss support measures for the automotive industry, which health is key to restoring the EU economy.
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By GlobalDataHe also addressed an audience of EU legislators and auto industry stakeholders at the ACEA annual reception in Brussels.
ACEA members are calling for a number of immediate actions for the automotive industry.
These include ensuring ‘a level playing field’ [words also used by BMW’s sales and marketing chief at the weekend – ed] by deploying and coordinating support measures such as market incentives, fleet renewal schemes and relieving cost of temporary unemployment throughout the EU.
“While some member states have taken these important steps, other still have to follow,” ACEA said.
Automakers also want improved access to liquidity by allowing state guarantees for low-interest loans and an increase in the amount of European Investment Bank (EIB) funding with quicker availability.
It said the competitiveness of the industry must be safeguarded by, among others, postponing costly new regulation and ensuring that newly negotiated free trade agreements are balanced.
“The measures that the EU has agreed upon so far are insufficient to meet the needs of our industry. In October last year, we have called for low-interest loans amounting to EUR40bn.
Up to today, vehicle manufacturers have already applied for over EUR6bn in EIB loans and the funds needed in 2009 alone could easily add up to EUR15bn. Similar levels may well be necessary in the years thereafter”, said Ghosn.
“The level of funding needs to be raised and decision making procedures must be simplified and shortened. This aid is urgently needed to maintain our industry’s capacity for innovation and ensure the transition to a low-emission fleet.”
Noting that automobile production was trimmed back by around 20% in the last three months of 2008 and 5% year-on-year after markets tanked in the second half, ACEA said it was anticipating a further decrease and expected European vehicle production in 2009 to decline by “at least 15%”, which, it stressed, “inevitably puts further massive pressure on costs and employment”.
ACEA said that, provided the right framework conditions were in place and assuming that sales would pick up again in 2010, the industry would strive to cope with flexibility measures such as those taken over the past few months: manufacturers cancelling temporary contracts and cutting working hours, aiming to retain a high-skilled workforce.
“In addition, the manufacturers are cutting general expenditure and investment levels.”
European vehicle manufacturers are also urging EU support for suppliers, whose access to credit is often even more critical, and where many more jobs are at stake.
“In terms of employment, every job within one of the vehicle manufacturers provides at least another five at vehicle parts suppliers, other equipment producers, car dealers, repair workshops and other vehicle-related activities,” ACEA said. “In countries such as Germany, France, Spain, Italy or the Czech Republic, the ratio is at least double as high.
“Preserving a solid supply chain from suppliers to dealers is indispensable for the existence of the automotive industry.”
