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Analysis of Car Industry in Europe

Table of Content

  • Executive summary
  • Introduction
  • Part A
  • Part B
  • Conclusions and Recommendations
  • References
  • Appendix

Executive Summary

This is the essay “Car Industry in Europe analyses the current status of the car industry in Europe and discusses in particular various aspects of the industry’s sustainable development in reference to the different environmental aspects. It addresses the various (specific) requirements the car industry needs to establish itself in the EU, particularly with regard to emission standards. It reviews the different Euro standards of emissions and continuous progress in the direction as well as the present emission norms, which has to adhere by the car industry in Europe. It also reviews all the protocols and steps to achieve the emission standards by EU and how it affects the present status of car industry and its requirements. The essay also looks at various technical measures to be taken by the automobile industry to improve the condition of more CO2 emitting vehicles towards less CO2 emitting ears. It also emphasizes how these measures improve the overall environment in the EU, especially the level of CO2 emissions that is to be achieved in a timely manner. Finally the essay recommends various measures on how the EU lawfully enforces these regulations to improve the overall GHG emissions situation. It also emphasize on how customers and car industry could be benefited by applying and adhering environmental standards for sustainable growth & development.


The European is at the forefront of international efforts to combat climate change and must deliver the reductions in greenhouse gas emissions to which it has committed under the Kyoto protocol. The greenhouse effect is one of the better-understood features of the atmosphere. In January 2007, the European Commission proposed “The EU pursues the goal of a 30 per cent reduction in GHG emissions by developed countries by 2020 in the form of international negotiations (compared to 1990 levels)”. To prevent inequalities, and in the interests of economic and social justice, all industries will contribute to the reduction effort.

Cars are an important part of the everyday lives of a large number of Europeans; the automobile industry is a significant source of employment and growth in many regions of the EU. Nevertheless, the use of vehicles has significant impacts on climate change, with around 12 percent of total EU CO2 emissions, the biggest greenhouse gas, coming from passenger car fuel consumption. Although significant improvements have been made in vehicle technology, particularly in terms of fuel efficiency, which also means lower CO2 emissions, this has not been sufficient to neutralize the effect of increased traffic and car size. While the EU as a whole has lowered its greenhouse gas (GHG) emissions by just under 5 per cent over the period 1990-2004, the emissions of CO2 from road transport increased by 26% keeping in view of the above situations in June 2006, European Council therefore unanimously reconfirmed that “In line with the EU Strategy on CO2 emissions from cars/light the average CO2 emissions of the new car fleet should be 140 g CO2/km by 2008/09 and 120 g CO2/km by 2012. ‘ The European Parliament called for ‘ a policy of strong measures to reduce transport emissions, including mandatory CO2 emission limits for new vehicles in the order of 80-100 g CO2/km for new vehicles to be accomplished in the medium term by emissions trading between automakers.

In view of the above developments in implementing environmental norms and standards by EU, car manufacturers around the globe may face specific problems as well as adhering norms laid down by EU. Often, the automotive industry is seen as one of the most global of all industries. With globalisation, the car industry is undergoing rapid changes (Carlson 2004). Rapid changes also change the structure and attractiveness of the market. The emerging markets (ASEAN countries, India China, Brazil & Eastern Europe) are leading in the growth rate of car sales compared with the US, Western Europe and Japan. Europe’s growth rate is around 3 percent, which is lower, and poses threats to the car industry’s survival in Europe. Presently the car industry is focusing their strategies in the emerging market due to cheap production costs especially due to cheap labor. “Corporate strategies in regard to globalization vary depending on the starting point of individual firms but there seems to be a large measure of convergence towards

  1. Building vehicles where they are sold.
  2. Designing vehicles with traditional global under body platforms while retaining the ability to adapt body trimming rates and ride features to a wide range of local conditions “(Sturgeon & Florida, 1999).

Political forces and WTO regime plays major role in opening of markets worldwide. Change in regulations of the market due to government policies and economic facilities such as FDI, taxation rates, infrastructure facilities, cheap labor, technically competent manpower etc., plays an important role for the car manufacturers to relocate their production and assembly lines in developing countries. Apart from many other factors ecological/environmental factors are one of the major factors, which have visible impact on car industry. Pollution, emissions norms, sustainable environmental policies has dominated the industry. CO2 emission and fuel consumption, alternative fuel such as bio fuels are the major areas of concern for car industry. Different countries have different norms for emissions and pollutions and car companies have to fulfill these norms accordingly (Madhavan, 2000).

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