22 December 2019

Since 2015, average new car CO2 emissions have been going in the wrong direction. Everyone knows why this is so bad: colloquially known as CAFE, it’s the 2020-on EU range-wide average of 95g/km CO2. And we’re well off target: this year’s SMMT New Car CO2 report put the UK on 124.5g/km CO2. It’s risen further since.

Car manufacturers are desperate to avoid paying fines. And not only because they’re horribly punitive: the negative PR of forking out billions in fines because your cars are too dirty really doesn’t fit with the world’s renewed ecological concerns. They’re terrified of being called out by Greta Thunberg.

The FT’s motor industry correspondent Peter Campbell last week wrote about the scale of the challenge. It’s well worth a read (be sure to check out the insightful comments, too). Bernstein auto analyst Max Warburton summed it up succinctly: “It’s just stunning, how much is going to have to be achieved in the next 18 to 24 months.”

If carmakers sell the same mix in 2021 as they did in 2017, he said, they’ll be hit with €25 billion in fines. And that’s an annual sum.

Retailer executives told Campbell that, to quickly drag down CO2, desperate measures may be mandated. Mercedes-AMG sales, for example might be restricted by as much as 75%. It might even limit availability of larger-engined, higher-CO2 variants. When your current CO2 is 138g/km and your target is 100g/km, needs must.

Retailers are going to be on the front line of automakers’ frenzied CO2 targets-chasing. PSA has apparently already changed its dealer bonuses from overall sales volumes to one based on CO2 emissions. For years, the Nissan Leaf was not included in bonus targets: from next year, it will be.

This will almost certainly lead to a disconnect between customers who want higher-CO2 SUVs and retailers being encouraged to get them into lower-CO2 electrified models. “There is going to be an imbalance between what consumers want and what manufacturers want to sell them,” Robert Forrester, chief executive of retail group Vertu, told Campbell.

How the industry takes on this challenge is going to be the story of 2020 and onwards. But retailers must not be exposed on the front line. This is the OEM’s challenge. It needs retailers on side in order to hit its goals.

Can we really cut CO2 25% in a year? The people selling the cars are going to play a pivotal role here. In 2020, new car sales is going to be all about CO2. If retailers really do help OEMs save a fortune in fines by convincing uncertain consumers, the debut of gratitude will be immeasurable.

So it seems the EU has already set your auto retail New Year’s resolution: enjoy the festive break, because from early 2020, CO2 targets-chasing is going to become the omnipresent story of the year…

Tags: CO2, FT, Mercedes Benz, Nissan, PSA, Robert Forrester, SMMT, Vertu