Europe’s top five carmakers have more than doubled their profits since 2019 despite claiming that they cannot afford to comply with planned EU pollution rules, analysis reveals.
The European auto industry’s “big five” – BMW, Mercedes, Renault, Stellantis and Volkswagen – collectively pocketed €64bn in profits by selling fewer cars, yet at more expensive prices, according to the study by Transport and Environment (T&E), a green thinktank.
But the five companies, which are this year paying out €27bn in shareholder dividends and stock buybacks, argue through their trade association that detoxifying car exhaust emissions would send car prices soaring by up to €2,000.
CEO pay at the car companies has ballooned, too. VW was the only one of the five large automobile companies not yet to have increased its top executive’s pay since 2019, but at the other four companies surveyed CEO pay rose between 22% and 103% over the same period, the report says. The average pay hike for a big five CEO over the three years of pandemic, war and inflation was 50%.
Europe has introduced a number of measures – the “Euro 7” – to cut the annual toll of 70,000 premature deaths in Europe from roadside emissions, and would cost €90-€150 a car according to European Commission figures. Globally, air pollutants such as particulate matter (PM2.5) and nitrogen oxides (NOx) have been blamed for 6.7 million premature deaths and more than a million stillbirths each year, as well as respiratory diseases, dementia and mental illness.
But earlier this month, Volkswagen called for the start of the Euro 7 scheme to be delayed, owing to its lead-in time and expense. Dirk Ameer, a spokesperson for Volkswagen, said the proposal would push up prices and “lead to lower sales, longer holding periods of older vehicles and a slowed down fleet renewal [and] could even negatively affect air quality. Without changes, especially in [the] timing of the Euro 7 proposal, a lack of engineering time will lead to significant production and job losses all over Europe. This will affect all production sites in Europe and all vehicle classes.”
According to T&E the cost of limiting the company’s toxic tailpipe emissions would amount to a maximum of €5.7bn over the regulation’s lifetime – or 37% of its profit in 2022.
Anna Krajinska, T&E’s vehicle emissions and air quality manager, said: “We don’t begrudge carmakers their record profits, but claims that they cannot afford cheap pollution fixes are simply corporate greed. The auto industry is maximising profits by selling more expensive premium vehicles while at the same time pretending pollution rules would make cars unaffordable. EU lawmakers need to put public health before the industry’s money grab.”
Although they collectively sold 25% fewer cars in the years after 2019, Stellantis and BMW respectively doubled and tripled their profit margins in these years, as an industry wide “volume to value” switch to pushing premium vehicles such as SUV’s took hold. At the same time, smaller and more popular models such as the Fiat Punto, VW Beetle and Citroen Picasso were scrapped.
The average price of a new Mercedes is now 43% higher than in 2019, while the company’s €14.5bn profit last year was 600% up on 2019, according to the study, which is based on company data and the Bloomberg terminal.
The Danish socialist MEP Christel Schaldemose, told the Guardian: “Since day one, the industry has rejected more stringent pollution standards, claiming they are too expensive and would price out affordable cars. Now we know that this is not the case and that they instead are putting the money in their shareholders pockets at the expense of cleaner air.”
However, a spokesperson for the European Automobile Manufacturers Association said: “Despite having minimal environmental benefits, the proposal risks placing unnecessary financial pressure on consumers and diverting investment from zero-emission technologies. According to some manufacturers’ estimates, the average consumer price of a new car could increase by €2,000. This increased cost is mainly due to the test framework conditions, including deliberate and continuous driving under extreme conditions.”
The Guardian approached the car companies for comment. A VW spokesperson said “Volkswagen Group supports the ambitious climate and air quality targets of German Government and European Union. We welcome the clear direction taken by the EU Commission with the Fit for 55 programme and the goals of the CO2 regulation.”
The Euro 7 benchmark, which would apply to about 100m vehicles before the EU’s ban on conventional engines takes effect in 2035, would tighten on-road emissions tests and continuously test emissions with onboard monitoring systems.
Its “Euro 6” predecessor dates to 2014, before the Dieselgate scandal. Volkswagen has since paid out €31bn in fines and settlements after using “defeat devices” to cheat emissions tests for about 11m cars between 2009 and 2015.
