EU struggles with national plans to rescue auto sector

As MEPs, the Council and the European Commission gear up for a debate in Strasbourg this afternoon (4 February) on the impact of the economic crisis on the car industry, accusations of state aid look set to fly. EURACTIV’s media network in Western and Central Europe takes a look at the situation in some key countries.

Thousands of workers across Europe have been laid off, as the global economic crisis sends car sales plunging and sparks fears of protectionism. 

Germany has already been critical of French measures to support its home-grown industry, while Belgium is seeking assurances from German Chancellor Angela Merkel amid fears that its assembly lines are threatened by Germany’s efforts to back its auto sector. 

This comes at a time when the Commission is openly critical of the United States for propping up its ailing automotive industry, and of Russia, where additional import duties on foreign cars came into affect earlier this month. 

Meanwhile, it emerged yesterday (3 February) that France may insist that carmakers buy specific volumes of parts from local suppliers as part of a government aid package. 

The Financial Times reported that French President Nicolas Sarkozy wants Peugeot and Renault to help support France’s domestic subcontractors and suppliers in return for government loans. 

The prospect of tax incentives and subsidies for national car industries was central to a meeting of industry ministers from across the EU in Brussels on 19 January (EURACTIV 19/01/09). 

Industry Commissioner Günter Verheugen warned member states not to resort to protectionist measures to prop up their automotive sector. Instead, he urged the industry to address its structural problems, such as „overcapacity and the need to invest in innovative technologies“. 

Any public sector support offered by member states should be transparent and respect EU competition and state aid rules, the Commission has stressed, underlining that „any race for subsidies is to be avoided“. 

The Belgian government this week (2 February) held crisis talks to assess the difficulties facing its automobile assembly plants. 

Fears persist over the future of a General Motors plant in Antwerp, where the Opel Astra is assembled. The plant is believed to be under serious threat, not just from the economic downturn, but also from the strategies employed to support national car industries. 

Belgium’s major concern is protectionist policies in neighbouring member states. Federal Enterprise Minister Vincent Van Quickenborne expressed concern over the situation, saying the government would seek clarification from Angela Merkel on the issue. 

„Belgium is an important country at the level of car assembly, but it does not have a national brand. If member states take measures which are only in the interest of national enterprises, Belgium risks being ignored.“