Analysis reveals that Europe’s five largest car manufacturers have seen their profits more than double since 2019. They claim they can’t afford to adhere to planned EU pollution regulations, but the analysis shows otherwise.
According to a study by Transport and Environment, a green think tank, the “big five” of European automakers – BMW Mercedes Renault Stellantis and Volkswagen — collectively made EUR64bn by selling less cars at higher prices.
The five companies that are paying out EUR27bn this year in dividends to shareholders and stock buybacks argue, through their trade association, that reducing car exhaust emissions could cause car prices to rise by EUR2,000.
The CEO pay of car companies has also risen dramatically. VW is the only company out of five that has not increased the pay of its top executives since 2019. The report states that the CEO salaries at the four other companies have risen between 22 and 103% in the same time period. The report says that the average CEO pay increase for a large five company over three years of pandemics, wars and inflation was about 50%.
According to figures from the European Commission, the “Euro 7” is a set of measures that Europe has taken to reduce the number of premature deaths caused by roadside emissions. The Euro 7 would cost between EUR90 and EUR150 per car. Air pollutants like particulate matter and nitrogen oxides are responsible for more than one million stillbirths and 6.7 million premature deaths each year. They also cause respiratory illnesses, dementia, and mental illness.
Volkswagen, however, called earlier this month for the delay of the Euro 7 program due to the cost and time involved in its implementation. Dirk Ameer said that the proposal could increase prices, and lead to a slower fleet renewal, as well as longer holding periods for older vehicles. A lack of engineering time, due to the timing of [the] Euro 7 proposal and other changes, will result in significant production losses across Europe. This will impact all production sites and vehicle classes in Europe.
T&E estimates that the costs of reducing the toxic emissions from the company’s tailpipes would be EUR5.7bn or 37% its profit by 2022.
Anna Krajinska is T&E’s manager of vehicle emissions and air pollution. She said, “We do not begrudge the record profits made by carmakers, but to claim that they can’t afford affordable pollution fixes is simply corporate greed. The auto industry maximizes profits by selling expensive, premium vehicles and pretending that pollution regulations would make cars unaffordable. “EU lawmakers must put the public’s health ahead of the industry’s greed.”
Stellantis, BMW and other manufacturers collectively sold 25 percent fewer cars after 2019. However, their profit margins increased by double and triple in those years as the industry shifted from “volume to values” to push premium vehicles like SUVs. The Fiat Punto and VW Beetle were also scrapped.
According to a study based on data from the Bloomberg terminal and company data, the average price of new Mercedes cars is now 43% more than it was in 2019. The company’s EUR14.5bn profits last year were 600% higher than they were in 2019.
Christel Schaldemose is a socialist Danish MEP. She said: “Since the beginning, industry has refused to accept more stringent standards for pollution, claiming that they were too expensive and would drive up prices of affordable cars. We now know that is not true and they are instead putting money into their shareholders’ pockets at the cost of cleaner air.
A spokesperson for the European Automobile Manufacturers Association stated: “Despite the minimal environmental benefits of the proposal, it risks placing unnecessary financial stress on consumers and diverting investments from zero-emissions technologies. Some manufacturers estimate that the average price of a car for a consumer could rise by EUR2,000. This cost increase is due to the testing conditions, which include deliberate and continuous driving in extreme conditions.
VW spokesperson stated “Volkswagen Group is committed to the ambitious climate and air-quality targets set by the German government and European Union.” “We welcome the clear direction that the EU Commission has taken with the Fit for55 programme and the CO2 regulations.”
The Euro 7 standard, which will apply to approximately 100m vehicles until the EU ban on conventional engine engines takes effect 2035 would be stricter on-road emission tests and continuously test emissions using onboard monitoring systems.
The Dieselgate scandal occurred in 2014 before “Euro 6”. Volkswagen has paid EUR31bn since 2009 in fines and settlements for using “defeat device” to cheat emission tests on about 11m vehicles between 2009 and 2015