EU, UK fine carmakers for recycling cartel
European carmakers have been fined €458 million ($495.6m) for participating in a 15-year cartel concerning end-of-life vehicle (ELV) recycling, Kallanish reports.
The European Commission said Tuesday that 16 major automakers and industry trade body ACEA entered into “anticompetitive agreements” and engaged in concerted practices related to vehicle recycling. The investigation was coordinated with the UK Competition and Markets Authority (CMA).
Thanks to Mercedes-Benz’s tip-off, officials in Brussels and London found that the parties agreed not to pay car dismantlers for processing ELVs and not to promote how much of an ELV can be recycled, recovered and reused.
“Their goal was to prevent consumers from considering recycling information when choosing a car, which could lower the pressure on companies to go beyond legal requirements,” the EC explains.
Japanese carmakers Honda, Mazda, Mitsubishi and Suzuki had a lower involvement, thus a smaller fine. Officials also granted a reduction to Renault since the French carmaker had previously asked to be exempted from the agreement not to advertise the use of recycled materials in new cars.
Stellantis, Mitsubishi and Ford benefitted from reductions of 50%, 30% and 20%, respectively, for their cooperation with the EC. Mercedes-Benz received full immunity for revealing the cartel, avoiding a fine of €35 million.
The investigation issued the biggest fine to Volkswagen at €127.7 million. Renault/Nissan followed with a penalty of €81.46m, while Stellantis (excluding Opel) was hit with a fine of €74.9m.
“Today, we have taken firm action against companies that colluded to prevent competition on recycling,” comments Teresa Ribera, EC vice president for Clean, Just and Competitive Transition. “We will not tolerate cartels of any kind, and that includes those that suppress customer awareness and demand for more environmental-friendly products.”
The official adds that high-quality recycling in key sectors such as automotive will be central to meeting the EU’s circular economy objectives, “not only to cut waste and emissions, but also to reduce dependencies, lower production costs and create a more sustainable and competitive industrial model in Europe”.
While ACEA was the facilitator of the cartel, its UK counterpart SMMT was also involved.
Separately, the CMA issued fines of over €77m to ten carmakers in the UK: BMW, Ford, Jaguar Land Rover, Peugeot, Citroen, Mitsubishi, Nissan, Renault, Toyota, Vauxhall and Volkswagen.
Under the so-called buyers’ cartel, the parties agreed among themselves how they would individually interact with suppliers. “In this case, the manufacturers involved mutually agreed the price that they would each individually pay for recycling services (zero), thereby preventing the providers of recycling services from negotiating a higher price,” the CMA explains.
Erste: European automotive suffers loses, Chinese industry booms
European automotive producers are losing out on the Chinese market, which is still crucial for their sales, according to Erste Group research.
In the past five years, the share of German brands in the Chinese market has decreased by 6 percentage points. “Earlier, for example, Volkswagen sold about a third of its global car production in China in 2023. Over the last ten years, passenger car production in Asia has increased by 33%, and in China even by 68%. By contrast, it has fallen by 11% in Europe and by 24% in Germany,” Erste notes in a report.
Moreover, Europe’s share of global passenger car production has fallen from 28% to 23%, while Asia’s has risen from 56% to 68% during 2012-2023, the document shows.
“The share of European passenger car production in total world production is falling, but European countries are still among the world’s major car manufacturers: Seven of the top-15 passenger car manufacturers are from Europe,” Erste Group notes. “Fortunately, Chinese companies have not yet established themselves in Europe. The most difficult situation today is in the German car industry. The point is that, in Germany, the unit labour costs in the automotive industry are two times higher than in Italy or Spain and three times higher than in the Czech Republic and other CEE countries.”
The most delicate situation is at Volkswagen, whose management plans to close up to three –of 10 – German factories, cut VW employee wages by 10% and conduct layoffs. The unions, on the other hand, want the carmaker to give pay rises, Kallanish notes.
According to the bank, one option is to move production to a cheaper foreign country. “This is already happening, as German production of passenger cars reached a peak before Covid-19 in 2016. It has been declining ever since. On the other hand, in countries like the Czech Republic and Slovakia, passenger car production has been rising,” the report observes.
Global motor vehicle production reached its all-time high in 2017, with 97 million motor vehicles produced worldwide, 70% of which were passenger cars, Erste Group says. Then came the pandemic and production fell by a quarter by 2020.
Production reached 93m units last year and was only 4% below the 2017 record.
Svetoslav Abrossimov Bulgaria
