Electrification and Regulation in Europe and Spain
The race toward electrification remains active, yet regulatory measures can raise price risks for vehicles. Upcoming environmental standards like Euro 7 will shape the industry in the years ahead. At a press briefing, no comments were offered that might push the electric vehicle initiative forward, a stance aligned with the European Commission’s broader goals. Volkswagen Group Distribution notes these tensions while outlining the shift toward cleaner mobility in Europe. In Spain, Francisco Pe9rez Botello warns of impending price increases as the required vehicle changes align with European law. He emphasizes that the cost of compliance will affect the market, with potential consequences including a 20 percent drop in sales and potential production line closures. The overall implementation cost of Euro 7 is substantial, and Botello suggests there may be more efficient environmental solutions such as renewing the vehicle fleet rather than clinging to older models. He also notes the broader implications for the industry and for consumers. Group Distribution.
As the German automotive group operates in Spain through brands like Seat and Cupra, a united European stance emerges to safeguard the national industry. Botello explains the need for more proactive measures, particularly since Spain relies heavily on the production of medium and small vehicles, which are most affected by the new regulation. He points to higher material costs driven by Euro 7 and remarks that manufacturers already operate on slim margins. Directly addressing the price impact, the executive indicates an increase of roughly 2,000 euros in production costs, a figure far above the EU charge of 150 euros. He adds a lighthearted jab about trusting engineers over politicians, while acknowledging Euro 7 as a catalyst that pushes investment toward electrification and could inadvertently reduce competition within the European industry. Looking ahead to 2035, when combustion engine sales are banned, substantial capital will be devoted to electrified models, which may render some current models obsolete in a decade. The concern remains that there may not be enough time to amortize the investments tied to Euro 7. Pe9rez Botello and Volkswagen Group Distribution.
Electrification and the Scrapping Debate
Botello advocates an electrification path anchored in practical environmental rules, supporting scrappage incentives to retire older vehicles. With estimates showing that nearly half of Spanish cars are over 15 years old, scrapping is presented as a faster, more efficient route to reducing emissions than extending the life of aging fleets. He argues that such measures, supported by manufacturers, make sense and can be implemented without ideological bias. The 2035 future, with a park dominated by newer vehicles, would still require swift action to address price pressures, and Botello stresses the importance of timely changes to avoid cost spikes. Pe9rez Botello.
In the industry, the term “refresh chain” describes the renewal pattern of a typical car ownership cycle. A vehicle lineup may include an older model around 15 years, moving through cycles of seven and four years before renewal. With the proposed scrappage framework, air quality improvements could be achieved significantly. Anfac, the manufacturers’ association in Spain, has urged the government to push back against overly stringent European regulations and to pursue an approach that raises the average age of the car park, currently around 13.9 years. Their proposals focus on three pillars: smarter automobile taxation, incentives for electric vehicles, and a comprehensive charging infrastructure plan. The example of Portugal, with a streamlined process for deploying charging networks, is highlighted as a model to emulate. and industry statements.
Botello also evaluated the group’s situation in Spain, noting that dealer profitability is expected to rise in 2022 to around 2.5 to 3 percent, higher than the national average of 2.1 percent. For 2023, the forecast remains above 2 percent. The group plans to implement an agency model adapted for electric vehicles and fleets within the year, emphasizing a collaborative approach with the commercial network. Dealers are considered the main asset in ensuring a successful transition to electrified sales channels. Pe9rez Botello.
Regarding competition from Chinese brands entering the European market, Botello welcomes competition but insists on equal conditions. A balance between European industry demands and the country of origin of vehicles is essential. The goal is fair treatment rather than protectionism, with the best-performing company thriving under a level playing field. Pe9rez Botello.