The economic situation of the automotive industry

Ivan Hodac

Secretary General

Brno, 5 June 2009

I. Current economic situation (1)

Vehicle Production

Europe World*2007: 19.7 million 2007: 69 million

2008: 18.4 million (-7%) 2008: 63 million

4th quarter 2008: -26%

1st quarter 2009: -37% 2009: 55 million**

Forecast Europe 2009: Passenger cars: 11.9 million (-25%) Commercial vehicles: 1.2 million (-50%)

*Source: Global Insight

** ACEA remark: forecast very optimistic

I. Current economic situation (2)

PC registrations

Europe Czech Republic2008: 14.7 million (-8.0%) 0.14 million (+8.4%)Q4 2008: -20.0% +2.4%Q1 2009: -17.2% -5.9%April 2009: -12.2% +19.0%

CV registrations

Europe Czech Republic2008: 2.4 million (-8.9%) 0.07 million (-3.8%)4th quarter 2008: -23.9% -30.0%1st quarter 2009: -35.4% -40.1%April 2009: -40.3% -69.9%

NOTE: Vehicle production figures differ from registration figures because part of the European production is exported outside the EU registrations in the EU include vehicles imported from outside the EU

II. Industry demands to the EU in the economic crisis

Safeguard level playing field More coordination of support measures

Framework conditions Avoid unnecessary administrative burden

Respect better regulation

Access to finance Solve problem of access to finance for OEMs and suppliers

Stimulate demand More fleet renewal measures needed

Social adjustment Make use of European funds

III. National government support measures: examples (1)

Germany Fleet renewal scheme: € 2 500 for scrapping old car and buying one <1 year old

Tax exemption for cars >Euro4

€ 500 million for R&D on alternative powertrains

France Fleet renewal scheme: € 1 000 for scrapping old car and buying new one; can be combined with CO2 bonus-malus system

€ 6.5 bn state loans to manufacturers

€ 2 bn re-financing facility for automotive financing companies

Fund for the modernisation of the supply chain

III. National government support measures: examples (2)

Spain €4 bn government support for the automotive sector (“Plan Integral del Automovile en Espana”)

€680 mil to be used for loans to manufacturers and suppliers in production facilities

€120 mil support for R&D investment and training

€10 mil for electric vehicles pilot programme

€950 mil investments in improving transport by road, rail and sea

About €650 mil financing facilities for automotive SMEs

New fleet renewal scheme: €2 000 for scrapping old car and buying new one or used car maximum 2 years old

Campaignsunderway

B

S

DK

SK

LT

PL

HF

EI

GR

DNL

A

NFIN

UK

P

IRL

EST

LV

CH

CZ

SLO

L

CYM

RO

BG

HR

TR

Discussions

A: €1 500 > 13 years New car min Euro 4€45 Mn9 months 2009

D: €2 500 further tax rebate for Euro 5/6 cars> 9 yearsMin Euro 4, max 1 year€1.5 Bn1 year 2009

RO: €1 000 > 10 yearsMax 60,000 vehicles11 months 2009

P: €1000/1250 > 10 years, >15 yearsNew car max 140 gCO2/km1 year 2009, extension?

I: €1 500 – 3 000 cars €2 500 – 6 500 LCVs > 9 years New car max 130-140 gCO2/km11 months 2009

SK: €2 000 > 10 years€22.1 Mn9 months 2009

UK: £2 000> 10 years£300 Mn10 months 2009-10

F: €1 000 + staggered tax rebate up to € 5 000> 10 yearsNew car max 160 gCO2/km (staggered)€220 Mn 1 year 2008 – 2009

L: €1500/1750 > 10 yearsNew car max 150 gCO2/km1 year 2009

NL: €750-1 000 cars €750-1 750 LCVs > 13 years (petrol)> 9 years (diesel)€65 Mn2009 – 10

E: Plan 2000E: €2 000 Plan VIVE: interest free loan (€10 000 max)> 10 years, or 250,000 km car max 5 years, max 140 gCO2/km1.5 years 2008 – 2010

III. Fleet renewal schemes in the EU

IV. Support measures at EU level (1)

The EU and the Commission lack instruments and powers…

for financial support (small EU budget, use very restricted)

for other incentives, such as tax incentives

… and could do more on regulation

Consider high cost of regulation on automotive industry

Respect for better regulation and use of impact assessments

Follow Competitiveness Council conclusions

IV. Support measures at EU level (2): 29 May Competitiveness Council

Regulation

Simplify legislation, reduce administrative burden

Utmost caution with new legislative measures

Impact assessment and cost-effectiveness analysis, including non-regulation options for all new legislative and non-legislative proposals

Impact assessments to reflect economic situation

Compliance with new requirements should not cause excessive costs to businesses

European funding

More effective use to be made of the instruments of the EIB and of the Structural Funds

IV. Support measures at EU level (3): Finance and demand

European Investment Bank: Clean Transport Facility Loans for investment in fuel-efficient and clean technologies

About € 7 bn will become available in 2009

Good start, but more funding will probably be needed

Stimulate demand Fleet renewal schemes in 12 countries (scrapping, tax measures)

help bridge downturn (production, employment)

Additional measures needed for commercial vehicles (public procurement, renewal of bus fleet, investment in infrastructure)

IV. Support measures at EU level (4): Social adjustment

European Globalisation Adjustment Fund for job search assistance

Adopt new rules quickly

Do not to establish additional criteria (bankruptcies, closures of production sites)

European Social Fund for training and retraining

significant resources, but lack of transparency and complex procedures

Make use of the instruments available at European level

V. Conclusions

The industry faces the biggest downturn in recent history

remains viable in the long term

needs quick, short-term support for financing, stimulating demand and social adjustment

What the EU and Member States can do Framework conditions: Scrutinise new and existing

regulation regarding better regulation, avoiding unnecessary administrative burden

Roadmap of envisaged legislative and non-legislative initiatives

Access to finance: increase EIB funding

Demand stimulus: Fleet renewal schemes

Use European Globalisation Adjustment and Social Fund

Backup I: Fleet renewal schemes

Country Incentive Vehicle age Duration

Austria € 1,500 > 13 years 01.04.2009-31.12.2009

France € 1,000 > 10 years 04.12.2008-31.12.2009

Germany € 2,500 > 9 years 14.01.2009-31.12.2009

Italy € 1,500-5,000 (cars)€ 2,500-6,500 (LCVs)

> 9 years 07.02.2009-31.12.2009(registration until 31.03.2010)

Portugal € 1,000 (petrol)€ 1,250 (diesel)

> 10 years> 15 years

01.01.2009-31.12.2009

Romania € 900 approx. > 10 years 01.02.2009-31.12.2009

Spain Interest-free loan up to € 10,000(Plan VIVE)

€ 2,000(Plan 2000E)

> 10 years or> 250,000 km

> 10 years(purchase new)> 12 years(purchase used)

01.12.2008-01.10.2010

18.05.2009

Country Incentive Vehicle age Duration

Luxembourg € 1,500-1,750 > 10 years 22.01.2009 – 01.10.2010

Cyprus € 675 - 1,700 > 15 years Ongoing

Slovakia €1,000-1,500

€ 2,000

> 10 years

> 10 years

09.03.2009 -25.03.2009

06.04.2009-31.12.2009

The Netherlands

€ 750 – 1,000€ 1,000- 1,750

> 13 years> 9 years

2009-2010Exact date TBD

Backup II: Vehicle productionCzech Republic and Skoda

Vehicle Production

Czech Republic Skoda2007: 0.94 million 2007: 0.62 million

2008: 0.95 million (+0.9%) 2008: 0.60 million (-3.1%)

Q4 2008: 0.20 million (-22.5%) Q4 2008: 0.11 million (-39.0%)

Q1 2009: 0.21 million (-23.0%) Q1 2009: 0.10 million (-45.5%)