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