EU is 'enhancing the internal market' for Europe's car industry

The motor vehicle industry is of 'strategic importance' to EU economic recovery and will play a key role in 'reindustrial-ising Europe', argues Daniel Calleja Crespo.

By Daniel Calleja Crespo

25 Jun 2014

The internal market for products has been a major driver of EU integration and still represents a key asset to promote growth and jobs. For an essential consumer product such as cars, the construction of a single market started many decades ago. The time that headlights were yellow in some countries and white in others is long past us. Instead, a single set of rules now applies to vehicles, in order to ensure a high level of consumer safety and environmental protection. Nevertheless, this sector cannot rest on its laurels and must continue to look for improvements, taking into account the evolution in markets and technologies.

The automotive sector is of strategic importance to the European economy and its products impact the life of European citizens on a daily basis. With around 12 million people employed, the automotive sector remains a key EU employer and thus plays a pivotal role for the prosperity of European citizens. Being the biggest private investor in research and development - €32bn in 2012 - it remains a catalyst to innovations and implementation of cutting edge technologies. It creates a total turnover of €839bn - around 6.9 per cent of EU GDP. European companies successfully market their products in many third countries creating a substantial positive trade balance of €108bn in 2012. The continuous evolution of the global automotive industry has accelerated since 2009. Third markets are growing fast, changing the trade flows and the automotive value chain. The economic crisis underscored the need to keep the automotive manufacturing base in Europe and to keep it competitive.

In the competitive automotive regulatory system (Cars) 2020 action plan for a competitive and sustainable automotive industry in Europe, the commission underlines that only by focusing on quality, added value and technology leadership, and on the car of the future, can Europe remain competitive on the global markets. Within the EU, a healthy and dynamic internal market can only be ensured if the EU manages to create the conditions for investment and growth by avoiding unnecessary burdens for the stakeholders in the sector. This obviously requires appropriate regulation, which through the harmonisation of rules leads to economies of scale and reduces development and regulatory accreditation costs. In addition, anticipative regulatory activity may lead to a situation where third countries and competitors follow, thus giving a competitive advantage to the European industry.

However, we have been vigilant not to create any additional unnecessary burden for industry resulting from our legislative work, in line with smart regulation principles. In particular, in recent years the automotive regulatory framework has been significantly streamlined, through the repeal of more than 50 directives and their replacement by internationally agreed rules. Furthermore, the commission has finalised a fitness check of the EU legislation, which has confirmed that our internal market legislation for automotive products, and in particular the so-called type-approval framework, is fit for purpose.

A powerful tool to ensure that automotive industry remains sustainable and competitive is the internal market legislation for the approval of automotive products. The so-called type-approval framework relies on testing only a small number of vehicles of a given car model or 'type', thereby keeping compliance costs to a minimum. The Cars 2020 action plan has called for improving the effectiveness of the EU type approval and this has also been confirmed in an extensive consultation with all stakeholders, including industry, authorities and consumer organisations. In particular, to address the problems arising from non-compliant and unsafe automotive products still encountered on the internal market, it will be important to enhance the controls performed on motor vehicles actually put on the market to ensure that they indeed meet all the legally required level of environmental and safety performance. By making sure all actors play by the rules, this will strengthen the level playing field in the sector. The procedure for recalling vehicles from the market will also have to be addressed. For example, when remedial actions are taken in one member state, other member states should take similar actions, thus ensuring that all EU citizens are effectively protected.

The automotive sector has a key role to play in achieving the commission's objective of reindustrialising Europe to achieve the 20 per cent target of GDP by 2020. Investing in advanced technologies and financing innovation with an effective regulatory framework can drive forward the EU agenda of industrial competitiveness, which with enhance the EU's position on global markets. To succeed, the European institutions, in close agreement with the member states and all relevant stakeholders, must work together to ensure that the automotive sector remains one of the pillars of the European economic recovery towards growth and jobs.

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