1. THE IMPACT OF THE GLOBAL CRISIS ON THE EUROPEAN AUTOMOBILE INDUSTRY MARC GREVEN DIRECTOR LEGAL AFFAIRS ASSISTANT TO THE SECRETARY GENERAL ACEA EESC HEARING, BRUSSELS, 6 FEBRUARY 2009

2. THE AUTOMOBILE INDUSTRY Economic importance –The most important manufacturing industry in the EU –Turnover = 6.5% of EU GDP –R&D expenditure = 20 bn (4% of turnover) –Export = 42.8 bn net trade balance –Vehicle tax revenue = 380 bn (3.5% of EU GDP) Employment –1 direct job in the auto industry supports 5 more jobs in the wider economy –12.1 m total employment (6% of EU employed population) –2.2 m direct jobs –9.8 m indirect jobs

3. CURRENT SITUATION (1) New passenger car registrations –- 7.8% in 2008 (14.7 m) –Sharpest decline since 1993 –- 19% in 4 th quarter –Some markets hit particularly hard (ES-28%, IRL - 18%, IT – 13%, UK -11%) –2009 forecast – 15% (12.8 m) New commercial vehicle registrations –- 9% in 2008 (2.5m) –Sharp decline in 3 rd & 4 th quarter (-12%, -24%) –2009 forecast -30% Similar developments in other world markets (US, Japan) –Significant slowdown of growth in BRICs

4. CURRENT SITUATION (2) Motor vehicle production in the EU –5% in 2008 (18.7 m) –2009 forecast – 15% Effect on employment –Extended vacations –Shorter working weeks –Temporary shutdowns –Non-renewal of temporary contracts –15% Reduction of direct employment expected –Possibly more unless public authorities act quickly and effectively

5. SUPPORT MEASURES (1) Public authorities must support industry –Direct & indirect support –No unnecessary legislation (CARS 21) –No unfavourable trade agreements (South Korea, WTO) Support measures must –Assist industry through the crisis –Have short-term impact –Facilitate access to credit –Stimulate market demand –Provide a level playing field –Strengthen the industry for the future

6. SUPPORT MEASURES (2) EU support limited to EIB financing –Plus temporary relaxation of state aid rules –Otherwise little competence & little money European Clean Transport Facility –EIB loans for manufacturers & suppliers –Investment in fuel-efficient & clean technologies –R&D + production facilities – 4bn per year in 2009 – 10 Indispensable but insufficient –Submitted projects > 6bn –Overall level of funding must be increased significantly –Guarantee requirements must be loosened –Unnecessary conditions & constraints must be removed

7. SUPPORT MEASURES (3) Many Member States are taking action –FR, DE, SE, UK, ES, PT, RO, AT, IT Financial assistance –Loan guarantees –Loans with reduced interest rates –R&D support –Training Programmes Market stimulation –Temporary exemption from car tax (DE, RO) –Fleet renewal measures (incentives from 1,000 to 2,500 in 7 countries)

8. CONCLUSIONS The situation is serious but not desperate The European auto industry remains viable long-term It needs more short-term support for financing and market stimulation Dont forget suppliers and dealers ! Emphasis on green technology is ok but favours certain countries How to maintain employment and reduce overcapacity ? More coordination is required to find a European solution to a European problem

9. THANK YOU Thank you for your attention For more info: www.acea.be