The united Europe is more and more turning into a divided Europe, at least when it comes to making cars. On one side are the hugely profitable German carmakers Volkswagen, BMW, Daimler and Porsche. On the other side are its loss-making or barely-profitable rivals including Fiat, Peugeot-Citroen, Renault and GM’s Opel. Now, the split drives the two countries apart that started Europe’s unification, France and Germany.
France’s new socialist government wants to punish buyers of bigger cars with huge taxes while lifting the tax burden on smaller cars. The bigger cars are mostly German.
“The French government raised incentives in July for smaller vehicle categories where its Peugeot and Renault champions still cling to market leadership despite double digit sales declines. The so-called “bonus-malus” plan also includes higher taxes on large autos dominated by German premium brands such as BMW and Volkswagen’s Audi and Porsche marques.
Penalties on new purchases of bigger cars – those with emissions of 181g or more of carbon dioxide per km – will be doubled, meaning that buyers of a BMW X5 SUV would incur a 4,600-euro tax while a Porsche Cayenne SUV would entail the maximum penalty of 7,200 euros. The French cabinet is due to approve the plans on Sept. 24.”
The German automaker association VDA is up in arms and says the bonus-penalty scheme may violate EU rules by discriminating against premium producers. “From the viewpoint of industrial policy, it’s wrong to believe that the domestic (car) industry can be aided by placing a completely exaggerated additional burden on high-end segments,” said VDA president Matthias Wissmann.
“The financial crisis has driven a wedge between the rich and poor European producers,” said Stefan Bratzel, head of the Center of Automotive Management near Cologne, Germany. Europe’s troubled carmakers are furious at Volkswagen for ramping up production at a time when they battle with overcapacity. Volkswagen kept some lines running during the summer holiday to catch up with demand, while its poorer relations sent its workers on a very long summer holiday.
Holidays being sacred in Europe, the war turns into a holy war.
Not really surprising, considering that ‘beggar thy neighbor’ has been the default position of Germany and France in the Euro debt crisis.
Love the Von Schlieffen plan reference.
No mention of France’s Plan XVII?? Make sure you watch the Ardennes.
The maginot line of today?
Das schafft kein Problem, aucun probleme, no French owner of large German Sedans or SUVs can afford them anyway, virtually all the big metal you see bearing French license tags are furnished by companies routinely to their important colleagues (collaborateurs as they are often referred to), most of those dudes get free gas and insurance as well, it is a non-taxed perk to get around the high income taxes levied on wages.
So what is an extra few thousand Euros to a business making Millions?
Why no mention of Ford Europe in the group of barely profitable/$$-losers?
Because while Ford Europe may swing from a frm a few 100 million profit to few 100 million loss year to year (more profits than losses lately) they are healthy in comparison to all the other. Renault, PSA, Fiat and especially Opel are dead (what is sad, I always thought Opel would be the perfect nameplate for a luxery brand). In Germany, while VW commands a large majority of the average citizens car choice, Ford is 2nd and respected (Ford is number 1 in England I believe). Ford invested heavily in EU (cars, tech, design influence, etc), while other’s neglected (especially others w/o much of a world presence) and that will pay off as the others die (remember at one point Opel/
saab engineering their Mondeo competitors to be 80% of what the Mondeo was)
If one has a interest in European law and trade this is like an old friend dropping by saying hi.
France has a tradition of doing this, setting a arbitrary limit (that just happens to make every non french car unattractive) on displacement, weight, length, HP or something ells, then some country brings it to the attention of the commission (sort of like the federal gov. in the US) or the commission acts ex officio. The French then makes some claim about all the birds falling down from heaven dead when a car over 9’/weighting more then a Pug 205/with more then a liter of displacement drives by, the commission calls bullshit (or the court does), the french then tries the same thing adding another inch/cm2/kilo, this goes on for a couple of times until everybody gets all pissy and somebody quips “farm subsidies”.
A BMW 640d puffs out 144g CO2/km so it’s not as if every “nice” car is going to be hit by this.
Aston Martin builds a very premium micro car that surely gets taxed at the lowest rate.
BMW and Mercedes are just beside themselves. Chinese customers aren’t buying the huge engines. American customers aren’t buying the huge engines. They need volume or else they just can’t amortize out the development costs for the two or three thousand sales they make a year in Monaco and Dubai.
The Aston Martin Cygnet is actually built by Toyota — it’s really a Toyota (Scion) iQ.
There is a strong misconception in this country, just because the French so called helped us get rid of the Brits, that France is a democracy like the US. Nothing could be far from the truth, the V Republic (yes the French have had 5 different constitutions since 1989) made France a benevolent dictatorship, they like to call it a “dirigiste” State, same thing, where the president and prime minister essentially rule a la Putin, whereas their parliament and Senate are just a bunch of boondoglers that rubber stamp every directive.
that’s how they get away with lascivious regulations, poor French, no wonder the Brits make so much fun of them.
I think you meant 1789, not 1989.
And in many ways the North American market suffers from more protectionism than France. We have safety and emissions regulations where they have economy standards and tariffs. The difference is that it’s possible to import a car into France provided you’re willing to pay the price, whereas in North America, “nonconforming” vehicles are sent to the crusher.
If you’d like see an open market, visit Switzerland or Iceland.
IF he did he is still painfully wrong.
One could also debate the presumption that the US is the shining light of democracy and the standard that all other systems should be judged against. One could further debate if the American system is really a realistic alternative in a unitary state and if its worse with a parliament that easily dethrone the president but has a lesser say in legislation then the opposite. All systems are flawed compromises, if one system is better then another is really, really hard to determine and the conclusion usually ends up resting on subjective ideas.
I remember spotting a Charger R/T in Reykjavik last summer. In fact there were quite a few American cars on the road.
It makes one wonder if they’re naturally inclined to need a monarch and his prime minister, having been for almost a thousand years between Rome and Bourbon lots of small kingdoms, dukedoms, and autonomous counties.
Enjoying the particular quirk that is French design is a joy of car watching; the French should pull out of the EU and regain their national independence so they can maintain their native industry.
Who else would make a corrugated-steel truck?
Five constitutions since 1989, you don’t say? So when de Gaulle became prince of Andorra in January 1959 he also became? 1) Chief of the Gauls 2) Emperor Napoleon the Fourth? 3) President of republic -1.
Well if you just slipped on the keyboard your still wrong, the only thing you got right regarding the date was the millennium, other than that french has had roughly 17 constitutions since 1791, if you count from – and including – the first republic- but disregarding the Vichy and provisional constitutions – they have had about 13 constitutions since 1793 and exactly one since 1989.
America is a constitutional republic – not a democracy. That’s how Bush Junior won the presidency without winning the popular vote. And what we can say about our congress is unprintable.
Well, technically, the US is a democratic republic, as opposed to some countries which have a republican form, but do not allow truly democratic elections. Sort of like what the Republican-dominated states are trying to achieve with their voter ID laws.
President Bush, not a junior, won the election by the rules which while related to our being a Republic instead of a simple democracy aren’t a necessary part of that. The electoral college has likely helped us avoid all sorts of trouble, so it’s a good thing on balance. It has worked both ways afterall. Also, you can say unprintable things about a saint if that’s your inclination. You could also try being constructive.
Furthermore, what states enacting voter ID laws are doing is protecting the process. Some fringe groups may see an advantage in voter suppression, but accusing the whole state of bad motivations is incorrect and out of line. The laws would be a non starter if it weren’t for so many known attempts at cheating.
Thinking as you have said here the United States is not a democracy, the president has many powers and the Senate is fed by lobbist …
Compare France to Russia, where Putin and his friend rule for more than 12 years uninterruptedly, is a narrow-minded vision.
Most BMW vehicles emmit significantly less than 181g CO2 per 100km. This policy primarily punishes people stupid enough to buy an X6 instead of something like 530d
Like the Maginot line, it will fail. The “unintended” victim here will be the larger French cars and the workers that build them. They will be instantly less competitive and profitable than they are now, and a transfer scheme, skimmed by those in power, will be needed for them.
VW builds plenty of small cars like the Polo and Up!, too. And it’s not like Citroen will get a break on C6s while BMW will be punished for the 5 series.
And France has not have five republics since 1989. I know it’s s typo, but there is the ability to correct it. How about a review of the autonomy German states have, or the role of ‘local government’ in the United Kingdom while you’re at it?
Personally I’d like a review of the difference in dealing with emissions regulations vis-a-vis EU and the principle of Subsidiarity depending on if the state is a unitary state or federal state.
thanks for straightening me out, it’s even worse than I thought, I am truly blessed not being French! no wonder they hate zee Germans, but of course, they also hate everybody, poor people
“no wonder they hate zee Germans, but of course, they also hate everybody, poor people” – why are you bringing the English into this?
The US has it’s fair share of xenophobes both on the left and the right and those ones are armed.
One of the golden rules as it applies to foreign nationals…
Don’t like where someone is from? Then do unto them the ‘exact opposite’ of what you would do to their government.
The French are just giving themselves another chicken tax… cockles and all.
Let the Germans retaliate with cheese! And sauerbraten! Also a competitive C-Class would be quite nice.
CO2-based registration tax is not exclusive to France. Other EU countries charge even larger premiums for vehicles with high CO2 emissions, one of which is my own, ie the Netherlands: a Camaro (6.2 V8 auto) costs a whopping €97,000 here, of which €57k is CO2-based tax. France, Germany: €39,000 for the same vehicle.
What the VDA seems to “forget” is that historically, cars with big engines have always been taxed heavily in France.
In the supposed European ‘Union’, car-based taxation (both on purchase and ownership) varies wildly between member states. Denmark for example borders on the insane with 180% tax, not including VAT (which is another 25%). Talking about non-tariff barriers…
I’m puzzled by this line:
“Europe’s troubled carmakers are furious at Volkswagen for ramping up production at a time when they battle with overcapacity.”
Since when is VW supposed to suffer like everyone else? It won’t help the losers if VW lays down, that’s for sure. Their overcapacity problems shouldn’t be VW’s burden to bear.
That figure doesn’t show the Schlieffen Plan, it shows what Germany actually did in WW I. Schlieffen called for the German right wing to be stronger, with the rightmost corps passing through the Netherlands and Belgium, and “the last man on the right, brushing the Channel with his sleeve”, and two corps going around the west side of Paris. Schlieffen’s plan would probably have won them a quick victory on the western front in WW I. Instead, after Schlieffen retired in 1906, his successor did what you see on the map. The weakened German right could not advance quickly, the French had time to build trenches, and the war bogged down in trenches for four years.
The EU has been trying to impose emissions-based vehicle fees throughout the union since 2005. http://ec.europa.eu/taxation_customs/taxation/other_taxes/passenger_car/index_en.htm
France is a member of the EU, of course.
The UK has already started doing this: http://www.guardian.co.uk/money/2010/apr/17/road-tax-carbon-emissions
I know that bashing the French is fun and everything, but the truth is a bit more dull than that. Or perhaps the Brits are trying to help the French car industry, and are using the emissions tax as revenge for the bombing of Coventry.
Emission taxes are quite common (or some other metric that correlate to emissions) in Europe and represents no real problem. It does become a problem if the premium (Bonus) maxes out before things like hybrids (where the french has been week) starts to pay of and if you start handing out punishments (malus)where you get above a certain segment.
So if the french would have implemented a straight tax, lets say X€ for every Y gram of CO2 emissions, there wouldn’t be a problem even if the tax for a 208 would have been half of that for a mid range 5 series.
But if they have a system where the Ampera, Tesla or Miev receives a tax rebate of 2X€ (as it’s the maximum bonus) and it also happens to be the exact same rebate awarded to a 208, that is a bit iffy as the Pug emits more CO2. Now If the french also just happens to place the limit for one has to start paying a penalty for CO2 just above the emissions for a diesel 308 it makes things more iffy. Even if the two tax systems still results in identical levels of taxation in the case of mid level 5 series and a 208 it isn’t certain that the two systems should be considered as fair. The later system allows the member-state to favor its domestic production to a greater degree.
France has made quite the habit of gambling the commission with the levels in the bonus-malus scheme, so I get why people get pissy (the solution is as always to bring farming subsides into play). If France had a genuine interest in limiting CO2 emissions via car taxation they could just tax every unit of CO2 emissions.
“if the french would have implemented a straight tax, lets say X€ for every Y gram of CO2 emissions, there wouldn’t be a problem”
To do that would completely miss the objective of an emissions-based tax.
The idea of such a tax is to motivate changes in behavior. If the tax doesn’t provide a break to the lower polluters, then it defeats the purpose of the tax.
Unfortunately, the behavior modification of a CO2 tax at purchase is sketchy at best. Once the car is purchased, it actually becomes a disincentive to replace the car for a cleaner version.
The high fuel tax was already doing the job quite nicely over there, and the CO2 tax is really no better than a luxury tax.
@Pch101 NO, not at all. You could have a straight tax rebate in euros, or, just lower the sales tax on cars and charge the CO2 surcharge so that the average car still pates the same tax. But I have realized the futility of debating with you and shall exit to the left.
“You could have a straight tax rebate in euros, or, just lower the sales tax on cars and charge the CO2 surcharge so that the average car still pates the same tax.”
Right. And do that would completely defeat the purpose of the tax.
I suspect that you don’t like the tax, so you refuse to understand how it works. It’s simple:
– The cars that don’t pollute much are rewarded with a low tax
– The cars that pollute a lot are taxed very heavily
The goal is obvious: Some consumers will see these two basic options, and choose the first option because it’s much cheaper.
The French government obviously wants more people to make the first choice. They would rather that you not buy a big polluter.
“Once the car is purchased, it actually becomes a disincentive to replace the car for a cleaner version.”
The tax on the cleaner cars is low, so there is no such disincentive. In the case of the Brits, some of the cleaner cars are paying less than they would have in the past.
What this does is constrain both the new and used car markets for cars with high emissions. The tax is payable regularly, not just on the initial purchase, so you can’t just sell the problem to the next guy.
A yearly tax is a new scheme, but there are still disincentives vs a fuel tax. If I need a truck or wagon, and therefore have to pay a yearly fee at a high rate, I will now use the truck for every trip rather than have a commuting car for that purpose. If the fee is high enough to modify behavior of ownership, it will likely overcome the extra cost per mile you could have saved with the lower emissions vehicle. Even at high rates of fuel taxation.
This whole argument assumes things that I still find questionable, but you know that. I am simply arguing for the sake of showing that the fuel tax is the best for the environment and these other schemes are silly results of pols being pols. I think we basically are going to end up disagreeing on what incentives really work because that’s a difference in our world views.
“there are still disincentives vs a fuel tax”
They aren’t cutting the fuel tax. Fuel in France will remain as expensive as ever.
What they’re doing is changing the method of calculating registration fees so that they include what amount to penalties for cars that emit more CO2.
“If I need a truck or wagon, and therefore have to pay a yearly fee at a high rate, I will now use the truck for every trip rather than have a commuting car for that purpose”
If you had to pay what the French pay for gas taxes, then no, you probably wouldn’t.
With a tax like this, I would expect it to increase demand for smaller gas engines (including more turbos) and for more diesels generally. Europe definitely doesn’t need the latter, so this particular approach is probably not a good idea, at least not in its present form.
Much of the market for new land yachts (the S-classes and the like) is for company cars. Executives get the cars from their employers that cover the cost of everything as a job perk. Those guys won’t be affected by this, since their employers are picking up the tab and the overall cost increase to their employers is minimal.
So we disagree, surprise, besides all that, it’s fundamentally unfair. Why tax someone because they MIGHT pollute more? No good reason other than looting.
bashing Brits on a car blog is fun too, after all, there are no more British cars, all their brands have either disappeared or are owned by someone else.
Morgan.
Phhhhhbbbbbttttttt!
Careful. If Ford’s CFO hadn’t hocked the firm to the hilt just before the recession, you’d be saying the same about the US.
True but all those foreign manufacturers combined to produce 1.46 million vehicles in 2011. Engine production is a bit of a surprise at 2.3 million units last year so you might want to have a closer look at where the engine that powers your Ford/Nissan/Toyota/Honda originated. Motor vehicles and parts accounted for 10% of the UK’s exports in 2011 which is actually pretty close in numbers to what it was in the 1980’s before the industry collapsed.
MAYBE, BUT WE STILL GOT TESLA
Prepare for governments around the world to do things like this. The more they run out of money the more they’re going to try to take.
Unfortunately I don’t know how to avoid this.
The French auto industry is run like Marshal Stalin all the competent officers are dead.
French auto industry being run like marshal Stalin, the fact that the first names of the two top guys at Renault is ‘carlos’ should tell you something, the born in France French are useless so they bring in ringers from outside the industry.