In Order to Meet Future CO2 Emission Targets, an OEM Will Need to Have 40 to 50 Per Cent of its Fleet Powered by Diesel and 10 to 15 Per Cent of the Fleet Running on Bio Fuels

Business Wire, April 24, 2007

DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c54844) has announced the addition of the new Frost & Sullivan report "A Strategic Assessment of the ACEA Agreement and its Implications on European OEMs" to their offering.

This Frost & Sullivan research service titled A Strategic Assessment of the ACEA Agreement and its Implications on European OEMs provides a detailed description of OEM strategies to reduce CO2 emissions. The study includes an impact analysis, as well as strategic recommendations for vehicle manufacturers, investors/share holders, local governments and customers. In this research, Frost & Sullivan's expert analysts thoroughly examine the technologies adopted, as well as those that are likely to be adopted by different OEMs towards CO2 emissions reduction.

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European car manufacturers are under growing pressure to reduce CO2 emissions from new passenger cars. In 1998, all European original equipment manufacturers (OEMs) voluntarily agreed to reduce fleet average CO2 emissions to 140 g/km by 2008 and 120 g/km by 2012. However, with the 2008 target fast approaching and the EU Commission expecting the Association des Constructeurs Europeens d'Automobiles (ACEA) to reduce the fleet average to 130 g/km by 2012, European OEMs, particularly premium car manufacturers, are facing an uphill struggle. In an attempt to reduce such emissions, the EU Commission has proposed a blend of ethanol with gasoline and diesel. It has also advised manufacturers to install gear shift indicators and tyre pressure monitoring systems in new vehicles to assist customers. In the light of these recommendations, it is clear that large-scale technological developments and efforts are required by European OEMs to reduce CO2 emissions and meet the target of the ACEA voluntary agreement.

"Over the next 3 to 5 years, as a medium-term strategy, OEMs are expected to introduce micro hybrids, mild hybrids, ethanol, bio fuels and liquefied petroleum gas (LPG) into their fleets to reduce CO2 emissions," notes the analyst of this research service. "These technologies offer increased fuel efficiency and reduced emissions, which will help OEMs reduce their fleet average CO2 emissions." In order to meet future CO2 emission targets, an OEM will need to have 40 to 50 per cent of its fleet powered by diesel and 10 to 15 per cent of the fleet running on bio fuels or natural gas or on a hybrid power train.

Integrated Approach with Local Governments and Fuel Suppliers Essential for Premium Car Makers

While some volume car makers, such as Fiat, PSA and Renault have fleet averages of 140-150 g/km of CO2 and are well positioned to meet the ACEA target for 2008, premium car makers with a fleet average of 160-190 g/km of CO2 are not likely to meet the said target. Thus, an integrated approach involving OEMs, investors, stakeholders, customers, local governments and fuel suppliers is important to reduce emissions below 140 g/km, particularly for premium car makers.

Going forward, emission reduction below 140 g/km of CO2 is possible mainly with the help of alternative fuels and hybrids (micro, mild and full). While OEMs are aware of this fact, further development or market acceptance of these alternative fuels and hybrids are restrained by factors such as distribution network, availability and high cost. "While advancements in engine technology have helped reduce emissions to an average of 160 g/km, hybrids, ethanol, bio fuels, compressed natural gas (CNG), hydrogen and fuel cells are necessary to reduce emissions further," explains the analyst. "The main priority of OEMs today is to reduce emissions and thus, help is required from local governments, as well as fuel suppliers for the promotion of alternative fuels and hybrids in a cost-effective manner." Besides, it remains to be seen if any of the local legislative bodies impose penalties for OEMs that are unable to comply with the ACEA agreement by 2008.