EU CO2 EMISSIONS FINISH LINE IN SIGHT

With the first of the EU’s deadlines for average emissions levels now looming large, the most recent analysis from JATO Dynamic’s annual CO2 report suggests that 2013 can be considered a watershed year for the industry. Last year, average CO2 emissions for new cars dropped below the 2015 target of 130g/km for the first time. The overall drop in CO2 reflects technological advances that have made cars more efficient, as well as a shift in consumer tastes towards lower emission models.

The data show that the industry as a whole has continued to build on the significant improvements it has made over the last 10 years. This was apparent from the overall average reduction of 5.5g/km – the greatest year-on-year drop for the last four years – with all model segments achieving average falls in CO2 emissions. Last year almost half (49.12%) of new cars sold had CO2 emissions of less than 120g/km; seven times the share of cars from a decade previously. The Netherlands led the way with the largest year-on-year drop in emissions in 2013, making them the first country to reduce average emissions below 110g/km.

However, there is still some work to be done within the industry, as some manufacturers are behind on the reductions needed to hit these 2015 targets.

Driving the Change

Some of the improvements can be traced back to the impact of broader economic factors, such as higher fuel prices and the introduction of incentive schemes (tax breaks, for example) within individual markets, which continue to play a significant role in bringing CO2 emissions down. The European Commission will greet the impact of these policies with enthusiasm, and governments will highlight the part they played. The UK Government, for example, ran the “Go Ultra Low” campaign last January, backed by BMW, Renault, Toyota and Vauxhall. Although many different groups are playing a role in reducing CO2, the industry has led the way through continued innovation in both engineering and car design, especially the manufacturers that hit their targets ahead of schedule last year.

Changes in fuel preference played a part as ‘pure’ diesel engines lost market share to ‘pure’ petrol. Advances in engineering make this less of an issue than in the past however, as there is now only 0.3g/km difference between the average emissions of both fuel types. A surge in the popularity of plug-in cars (both electric vehicles and range extended electric vehicles/plug-in hybrids) has also brought down emissions. These models more than doubled their market share last year, to 0.49%.

These sales are part of a broader trend towards smaller and more efficient cars, driven by more environmentally conscious consumers, which has also contributed to the overall reduction in average emissions. Consumers have also demonstrated a preference for models with improved powertrains. This has meant that larger models that tend to larger amounts of CO2 have also seen notable improvements.

Leading the Way

The 2013 data shows that nine manufacturing groups met the 2015 target two years ahead of schedule. Mitsubishi was the lowest-emitting group overall, while PSA was the best performer out of the high-volume manufacturing groups. Maserati is the most improved manufacturer, with average CO2 emissions for its fleet down by 60.2g/km compared to the previous year.

Renault was the lowest emitting of the high-volume brands. However, improvements were seen across the majority of volume brands, and average emissions for the top 6 volume brands fell below 120g/km for the first time. Infiniti’s Q50 was the most improved model, cutting average emissions by an impressive 111.4g/km compared to its 2012 predecessor. For the second year running, the Lexus CT was the lowest-emitting model without a plug-in version, with average emissions of 93.2g/km.

Not Quite there Yet

Some manufacturers will need to make further improvements if they hope to meet the 2015 targets. Subaru and Tata Motors are under pressure after failing to meet 2013 targets and both will have to make the biggest improvements overall in order to bring their average fleet emissions down to 130g/km before the deadline. Since both are medium-volume brands they could choose the alternative 25% target, which would make this more manageable and put Subaru already ahead of its equivalent 2015 target. Tata’s Jaguar Land Rover division has new models, including hybrids, coming soon, so they should also achieve the 25% target by 2015.

The good news is that the 2015 target is in reach for the vast majority of manufacturers. This will require some work for Mazda, Honda and Suzuki, but it should still be achievable nonetheless. It is also encouraging that very few brands went in the wrong direction last year, and of those that did some, like MINI and Kia, saw minimal increases of less than 1g/km. One exception to this was Ferrari – average emissions were up 20.4g/km year-on-year for 2013, bucking the general trend seen in the S (sports) segment.

Conclusions

Overall last year was a good news year for manufacturers, regulators and the environment as the industry made another big step towards the magic 130g/km which now looms large as we approach the new year. Since the 2015 targets were set, the industry made significant progress in car emissions thanks to technological innovations and has seen a further boost thanks to economic and consumer trends in recent years. Although many manufacturers have met their targets (provided, of course, that they have not slipped backwards in 2014) and many others are nearly there, we would expect to see further improvements between now and the 2015 deadline.

One main reasons for this is that the 2015 target is just the end of the beginning. Manufacturers will already be looking ahead and planning how they are going to make further reductions to CO2 emissions levels in order to meet the next round of European Commission targets. Politicians, manufacturers and consumers can all be proud of the part they played in the progress to date, but it will take continued innovation, technological improvement and sustained demand for low-emission vehicles to meet the next challenge that lies ahead.

Brian Walters is Vice President of Data at automotive intelligence provider JATO Dynamics

For more information about JATO Consult’s Report 2013 – ‘A Review of New Car CO2 Emissions across Europe,’ please click here to make an enquiry.