Global Update


Vehicle manufacturers assembling vehicles in Europe have been urging EU officials and national government representatives to provide them relief in the form of tax breaks and grants. German officials have already agreed to cut consumer taxes on new-car purchases. For those vehicles sold between now and August 31, 2008, that don’t meet Euro 5 standards, a six-month to one-year tax break will be awarded. The tax holiday will be extended up to two years for all cars.

“Environmentally friendly” is defined as compliance with the Euro 5  (all models sold September 1, 2009 must adhere to Euro 5).

British officials are also under pressure to implement a temporary halt to that country’s vehicle Excise Duty (VED), an annual tax on the ownership of road vehicles determined by a vehicle's carbon-dioxide emissions levels. This provides for a sliding scale of liabilities ranging currently from a maximum of £400 per annum (US $598) for gas- and diesel-powered vehicles down to £35 (US $52) for the least polluting.

Alternative-fuel vehicles in this category qualify for an even lower rate. As of 2009, the rate is to increase for the cars with the largest engines. British Prime Minister Gordon Brown is under pressure to cancel or delay the announced rise in the tax.  

Car manufacturers are also seeking low-interest loans from the largest national economies. France, too, is expected to come up with some support for French car companies, most likely in the form of research-development grants to the tune of €400million (US $547 million) to develop more fuel-efficient cars. The United Kingdom and Germany are also considering similar packages to coincide with any funds provided on the European-wide (European Union) level. 

Car manufacturers are seeking Euro 40 billion (US $50 billion) in low-interest loans channeled through the European Investment Bank from the leadership of the 27-nation bloc, the executive branch of the EU. The European Commission is expected to complete their proposal by December 1, with low-interest loans, dispensed over three to four years, to finance car manufacturers' research and development of new fuel-efficient products.

All car companies with manufacturing operations in Europe would be eligible for the funding, including the European subsidiaries of General Motors, Ford and Japan's Toyota Motor Co.

For more information. please contact Linda Spencer at