The Czech presidency of the European Union (EU) has unveiled a plan to offer subsidies to consumers who want to replace their old cars with new. It is the latest strand in the EU’s strategy to help the European auto industry through the current tough trading conditions.

Czech deputy prime minister Alexandr Vondra told  the European Parliament in Strasbourg yesterday (4 February) that his government had told the European Commission to draft proposals for an EU-wide scheme of car “fleet renewal”, spreading existing national subsidy schemes [such as the ‘Prever’ scheme in Spain and a new programme recently announced in Germany] for scrapping old cars across Europe.

This, he told MEPs, would be “an important demand stimulus for the automobile industry at an [EU] level.” The system would not favour one country over another, he stressed, thus “creating a level playing field” in the EU market. Vondra wanted quick action, with formal proposals drafted in time for the EU’s spring summit 19-20 March in Brussels.

“We would like to ask the European Commission to come up immediately with a proposal on how to encourage, in a coordinated manner, a European car fleet renewal in the area of vehicle recovery and recycling,” he said.

Vondra noted that newer vehicles would also have “positive effects on innovation, transport security and reduction of emissions”.

The plan received a cautious welcome from industry commissioner Günter Verheugen, a German, whose officials would be responsible for drafting legal proposals based on the Czech ideas. Wanting to shape demand towards the green cars of the future, he said purchase premiums should be paid for automobiles that operate “at the highest environmental standard.”

Verheugen painted a gloomy picture, warning that it was quite likely that 2009 would see the closure of some major European car manufacturers: “Some car makers in Europe could close,” although the commission would do its best to prevent this happening.

Present sales figures reflected “a lack of confidence in the economy”, making consumers unwilling to spend the money required to buy a motor vehicle. This created knock-on economic threats given the EU car industry employed 12m people, or 6% of all jobs in Europe, and was the EU’s sixth biggest exporter, stressed the commissioner.

And while the quality of European cars were unrivalled, he claimed, the industry was hampered by the credit crunch, “excess capacity” and environmental and technical “legislation, which has made European cars expensive”. This was pressuring the industry to boost productivity, something that “won’t have a positive effect on employment”.

Both Vondra and Verheugen, speaking in a debate on EU automobile industry policy, stressed any EU support for the sector would have to improve its long term competitiveness.

“This means focusing clearly on innovation”, said the Czech deputy PM. It should not be “a race for subsidies”, and not result in “market distortions” allowing unpopular models to survive.

British Labour MEP Stephen Hughes warned that the recent loss of 1,200 jobs at Nissan’s Sunderland plant in north-east England [many more temporary workers have also been laid off across the UK auto industry and at least 2,000 ‘voluntary redundancies are also in process – ed] was an indication of the seriousness of the current recession.

“If such a plant, widely acknowledged as the most productive in Europe…needs to lay off a quarter of its workforce then heaven help us when this crunch fully hits the less productive.”

Keith Nuthall

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