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philip · 02-06-2007, 11:42 PM

Its Germany vs France and Italy.

"Porsche Rails at Emissions Caps That Favor Ghosn's Smaller Cars

By Alan Katz and Jeremy van Loon

Feb. 6 (Bloomberg) -- Porsche AG is under threat from the drive to combat global warming, Chief Executive Officer Wendelin Wiedeking says.

Wiedeking has joined with other German luxury-car makers to protest a mandatory European Union cap on carbon-dioxide emissions that he says favors companies such as Renault SA and Fiat SpA that produce smaller vehicles.

``This is a business war in Europe,'' Wiedeking, 54, told shareholders at Stuttgart's Porsche Arena on Jan. 26. ``It's the French and Italians up against the Germans.''

The European Commission is proposing binding limits because carmakers risk missing voluntary targets. The commission plans to outline a preliminary proposal tomorrow in Brussels. Carlos Ghosn of France's Renault says it's time the industry did more to protect the environment. Renault, PSA Peugeot Citroen and Turin, Italy-based Fiat each have several models with limited emissions.

Cars account for more than a 10th of the EU's emissions of CO2, the main gas blamed for global warming.

``Jobs are not lost when you proactively embrace change, but if you reactively resist it,'' said Johannes Laitenberger, the spokesman for Commission President Jose Barroso. The goal is to limit climate change while preserving competitiveness, he said.

``The key to meeting both objectives is to be ahead of the game, not sticking our heads in the sand, not standing still,'' Laitenberger told reporters in Brussels on Jan. 29.

120 Grams

Passenger cars in the EU emit an average 161 grams of CO2 a kilometer (9.14 ounces a mile), according to the EU.

The European industry's non-binding goal is to reduce emissions to 140 grams in 2008. EU regulators have discussed a mandatory cap of 120 grams a kilometer in 2012, said Environment Commissioner Stavros Dimas. Porsche's least-emitting vehicles are versions of the Boxster and Cayman sports cars, which each produce 222 grams of CO2 per kilometer.

It will cost carmakers an average 2,532 euros ($3,297) a vehicle to meet both targets, according to an October 2006 report for the commission. The cost to Porsche may average 4,650 euros a car, said Ferdinand Dudenhoeffer, head of the Center for Automotive Research at the University of Gelsenkirchen near Dusseldorf in Germany. He was once an executive at the company.

Paris-based Peugeot may say Feb. 7 that second-half net income fell 23 percent to 269 million euros as demand for its vehicles declined in Western Europe, according to the median estimate of 11 analysts surveyed by Bloomberg News.

Renault, which reports earnings on Feb. 8, will probably say profit dropped 13 percent to 1.04 billion euros, according to a survey of 10 analysts. Renault is also being hurt by shrinking earnings at Nissan Motor Co. Renault owns 44.3 percent of Japan's third-biggest carmaker.

Tug of War

Tomorrow's proposal will start a tug of war among companies, countries and the commission, the EU's regulatory arm, to determine how to attain the target and how to penalize carmakers for failing to work toward the industry average. A draft law is expected later this year. It will need the backing of national governments and the European Parliament to take effect.

``How would they make binding targets?'' Ivan Hodac, secretary general of the European Automobile Manufacturers Association in Brussels, said. ``We don't know. No one knows.''

German Chancellor Angela Merkel has vowed to protect her country's carmakers, saying on Jan. 30 in Berlin that the government of Europe's largest economy will block any attempt to introduce a blanket emissions reduction for all cars and will instead push for limits to be set by type of vehicle.

Changing Habits

The cap may change the landscape of the European car market, pushing people to buy smaller cars with smaller profit margins, said Tadashi Arashima, head of Toyota Motor Corp.'s European unit, which is based in Brussels.

``We need to figure out how to grow sales and profitability anyway,'' he said.

Toyota's Aygo subcompact and Prius hybrid cars already emit less than 120 grams of carbon dioxide per kilometer. Other models below that level include versions of Stuttgart-based DaimlerChrysler AG's Smart ForTwo, Peugeot's 107 and 207, as well as Fiat's Panda and Grande Punto hatchbacks.

Renault has some Megane compact hatchbacks that fall in that category.

``There is a point in time when society has to set what it wants,'' Renault's Ghosn, 52, said in a Jan. 25 interview at the World Economic Forum in Davos, Switzerland. ``I consider that it's the time. We're just going to have to deliver the best, and we have the technology to do it.''

German carmakers don't want Europe's efforts to come at their expense.

`Jobs Will Migrate'

Wiedeking, DaimlerChrysler's Dieter Zetsche and Bayerische Motoren Werke AG CEO Norbert Reithofer, along with the heads of the local units of General Motors Corp. and Ford Motor Co., signed a Jan. 26 letter to the commission saying the new rules would be ``technically infeasible.''

``Auto exports will suffer, imports will increase, the sale of upper- and mid-range vehicles will fall dramatically and jobs will migrate from the EU,'' they wrote, citing the commission's own study of the regulation.

About 15 million cars are sold annually in the EU, where about 2 million people are employed making vehicles and their parts. That represents 7 percent of all EU manufacturing jobs.

Porsche boasts the car industry's highest profit margin, with operating profit representing 29 percent of sales in fiscal 2006. That compares with 4 percent at Fiat and Renault's estimate of 2.5 percent.

Cayenne SUV

``If legislation makes it very expensive for German cars to reach emissions limits, it could make them less attractive compared with smaller French and Italian cars,'' said Peter Braendle, a fund manager at Swisscanto Asset Management in Zurich, which manages $44 billion including DaimlerChrysler and Peugeot shares. ``That could shift investment decisions.''

Porsche shares rose 59 percent last year to 964.06 euros, compared with a 32 percent gain for Renault, 9 percent for DaimlerChrysler, 8 percent for BMW and 3 percent for PSA Peugeot Citroen.

Wiedeking told Porsche shareholders that sports cars and sport utility vehicles such as Porsche's should be exempt from any new rules or subject to different regulations based on horsepower or fuel efficiency.

Porsche's most powerful vehicle, the Cayenne Turbo S SUV, seats five and generates 520 horsepower, more than twice as much as some 18-ton delivery trucks. With a price tag that starts at $111,600, it also produces 378 grams of CO2 a kilometer.

``Why does an SUV need 500 horsepower?'' Wiedeking said, reading a question from a shareholder. ``Because it's a blast.''

The University of Gelsenkirchen's Dudenhoeffer said customers for bigger, more expensive models wouldn't balk at paying a bit extra to gun their engines.

``For the premium car manufacturers, they will simply pass the extra costs on to their customers, who are not especially price sensitive,'' he said. ``This shouldn't hurt their profit.''

To contact the reporter on this story: Alan Katz in Paris at [email protected] and Jeremy van Loon in Berlin at [email protected]

Last Updated: February 5, 2007 21:04 EST"

Go ahead EU strangle the most profitable car company in the world, just to make Al Gore happy.

02-06-2007, 11:42 PM	#3
philip Regular User Join Date: May 2006 Location: Houston Posts: 812	Its Germany vs France and Italy. "Porsche Rails at Emissions Caps That Favor Ghosn's Smaller Cars By Alan Katz and Jeremy van Loon Feb. 6 (Bloomberg) -- Porsche AG is under threat from the drive to combat global warming, Chief Executive Officer Wendelin Wiedeking says. Wiedeking has joined with other German luxury-car makers to protest a mandatory European Union cap on carbon-dioxide emissions that he says favors companies such as Renault SA and Fiat SpA that produce smaller vehicles. ``This is a business war in Europe,'' Wiedeking, 54, told shareholders at Stuttgart's Porsche Arena on Jan. 26. ``It's the French and Italians up against the Germans.'' The European Commission is proposing binding limits because carmakers risk missing voluntary targets. The commission plans to outline a preliminary proposal tomorrow in Brussels. Carlos Ghosn of France's Renault says it's time the industry did more to protect the environment. Renault, PSA Peugeot Citroen and Turin, Italy-based Fiat each have several models with limited emissions. Cars account for more than a 10th of the EU's emissions of CO2, the main gas blamed for global warming. ``Jobs are not lost when you proactively embrace change, but if you reactively resist it,'' said Johannes Laitenberger, the spokesman for Commission President Jose Barroso. The goal is to limit climate change while preserving competitiveness, he said. ``The key to meeting both objectives is to be ahead of the game, not sticking our heads in the sand, not standing still,'' Laitenberger told reporters in Brussels on Jan. 29. 120 Grams Passenger cars in the EU emit an average 161 grams of CO2 a kilometer (9.14 ounces a mile), according to the EU. The European industry's non-binding goal is to reduce emissions to 140 grams in 2008. EU regulators have discussed a mandatory cap of 120 grams a kilometer in 2012, said Environment Commissioner Stavros Dimas. Porsche's least-emitting vehicles are versions of the Boxster and Cayman sports cars, which each produce 222 grams of CO2 per kilometer. It will cost carmakers an average 2,532 euros ($3,297) a vehicle to meet both targets, according to an October 2006 report for the commission. The cost to Porsche may average 4,650 euros a car, said Ferdinand Dudenhoeffer, head of the Center for Automotive Research at the University of Gelsenkirchen near Dusseldorf in Germany. He was once an executive at the company. Paris-based Peugeot may say Feb. 7 that second-half net income fell 23 percent to 269 million euros as demand for its vehicles declined in Western Europe, according to the median estimate of 11 analysts surveyed by Bloomberg News. Renault, which reports earnings on Feb. 8, will probably say profit dropped 13 percent to 1.04 billion euros, according to a survey of 10 analysts. Renault is also being hurt by shrinking earnings at Nissan Motor Co. Renault owns 44.3 percent of Japan's third-biggest carmaker. Tug of War Tomorrow's proposal will start a tug of war among companies, countries and the commission, the EU's regulatory arm, to determine how to attain the target and how to penalize carmakers for failing to work toward the industry average. A draft law is expected later this year. It will need the backing of national governments and the European Parliament to take effect. ``How would they make binding targets?'' Ivan Hodac, secretary general of the European Automobile Manufacturers Association in Brussels, said. ``We don't know. No one knows.'' German Chancellor Angela Merkel has vowed to protect her country's carmakers, saying on Jan. 30 in Berlin that the government of Europe's largest economy will block any attempt to introduce a blanket emissions reduction for all cars and will instead push for limits to be set by type of vehicle. Changing Habits The cap may change the landscape of the European car market, pushing people to buy smaller cars with smaller profit margins, said Tadashi Arashima, head of Toyota Motor Corp.'s European unit, which is based in Brussels. ``We need to figure out how to grow sales and profitability anyway,'' he said. Toyota's Aygo subcompact and Prius hybrid cars already emit less than 120 grams of carbon dioxide per kilometer. Other models below that level include versions of Stuttgart-based DaimlerChrysler AG's Smart ForTwo, Peugeot's 107 and 207, as well as Fiat's Panda and Grande Punto hatchbacks. Renault has some Megane compact hatchbacks that fall in that category. ``There is a point in time when society has to set what it wants,'' Renault's Ghosn, 52, said in a Jan. 25 interview at the World Economic Forum in Davos, Switzerland. ``I consider that it's the time. We're just going to have to deliver the best, and we have the technology to do it.'' German carmakers don't want Europe's efforts to come at their expense. `Jobs Will Migrate' Wiedeking, DaimlerChrysler's Dieter Zetsche and Bayerische Motoren Werke AG CEO Norbert Reithofer, along with the heads of the local units of General Motors Corp. and Ford Motor Co., signed a Jan. 26 letter to the commission saying the new rules would be ``technically infeasible.'' ``Auto exports will suffer, imports will increase, the sale of upper- and mid-range vehicles will fall dramatically and jobs will migrate from the EU,'' they wrote, citing the commission's own study of the regulation. About 15 million cars are sold annually in the EU, where about 2 million people are employed making vehicles and their parts. That represents 7 percent of all EU manufacturing jobs. Porsche boasts the car industry's highest profit margin, with operating profit representing 29 percent of sales in fiscal 2006. That compares with 4 percent at Fiat and Renault's estimate of 2.5 percent. Cayenne SUV ``If legislation makes it very expensive for German cars to reach emissions limits, it could make them less attractive compared with smaller French and Italian cars,'' said Peter Braendle, a fund manager at Swisscanto Asset Management in Zurich, which manages $44 billion including DaimlerChrysler and Peugeot shares. ``That could shift investment decisions.'' Porsche shares rose 59 percent last year to 964.06 euros, compared with a 32 percent gain for Renault, 9 percent for DaimlerChrysler, 8 percent for BMW and 3 percent for PSA Peugeot Citroen. Wiedeking told Porsche shareholders that sports cars and sport utility vehicles such as Porsche's should be exempt from any new rules or subject to different regulations based on horsepower or fuel efficiency. Porsche's most powerful vehicle, the Cayenne Turbo S SUV, seats five and generates 520 horsepower, more than twice as much as some 18-ton delivery trucks. With a price tag that starts at $111,600, it also produces 378 grams of CO2 a kilometer. ``Why does an SUV need 500 horsepower?'' Wiedeking said, reading a question from a shareholder. ``Because it's a blast.'' The University of Gelsenkirchen's Dudenhoeffer said customers for bigger, more expensive models wouldn't balk at paying a bit extra to gun their engines. ``For the premium car manufacturers, they will simply pass the extra costs on to their customers, who are not especially price sensitive,'' he said. ``This shouldn't hurt their profit.'' To contact the reporter on this story: Alan Katz in Paris at [email protected] and Jeremy van Loon in Berlin at [email protected] Last Updated: February 5, 2007 21:04 EST" Go ahead EU strangle the most profitable car company in the world, just to make Al Gore happy. __________________