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Renault CEO Calls On EU To Encourage Small Cheap Cars
Renault CEO Luca de Meo makes a striking appeal to the European Union: Europe must extensively stimulate small, cheap cars, as Japan does with Kei-cars. For the environment, but also for employment and the future of the European car industry.
Luca de Meo should not be missing from the growing list of concerned executives from the European car industry. In a detailed letter to the European Union, the Renault CEO not only expresses his concerns but also gives tips and ideas. Such as European cooperation following the example of Airbus and encouraging small and cheap cars that no longer exist due to too strict rules.
“In the last twenty years, the average price of a city car has risen from €10,000 to €25,000,” De Meo writes in his letter. “The average annual budget for consumer mobility has increased from €3,500 to €10,000 in the same time. In the same period, average income rose by only 37 percent, forcing the middle class to turn away from cars.” In Europe we see this clearly in the figures: between 2019 and 2023, annual car sales fell from 13 million units to 9.5 million.
Kei cars
De Meo seems to have no doubts about the cause of this problem: regulations. “Driving around every day in a 2,500 kg electric vehicle makes no environmental sense at all. The problem, however, is that European regulations on safety and emissions make it very difficult to profitably build small cars, with the result that sales in the small segment have fallen by 40 percent in the last twenty years.” the Renault CEO has a point because there are almost no really small cars left and the cars in a higher segment—the Clio and Polo formats—are relatively large, heavy and expensive, not to mention their SUV brothers.
That has to change, says De Meo, especially because of the environment. According to the Renault CEO, small and simple cars have up to 75 percent less environmental impact than the larger and heavier ones that may be unintentionally stimulated by the current rules. The solution, so to speak, lies in Japan, where small ‘Kei cars’ with strict limits on external dimensions and engine capacity are strongly encouraged. This is also necessary here, says De Meo: “We can quickly reverse the trend with a series of simple, cheap measures, such as a social leasing plan, free parking, special charging rates, lower interest rates on loans, and so on.”
Airbus model
According to De Meo, these small cars must come from Europe, because the ultimate goal of the letter is mainly to underline the importance of a healthy European car industry. To achieve incentives for small European cars, car manufacturers must work much more closely with each other and with governments, for example. De Meo also sees this as an important step for the European car industry, which should unite much more strongly, following the example of aircraft manufacturer Airbus. European companies are smaller than Asian and American giants, he concludes, but they face the same challenges. They are also larger here in Europe than elsewhere in the world, says De Meo. “While China wants to conquer the market and the US protects itself with import duties, there are only more and more rules in the EU that make it extremely difficult for car manufacturers to be competitive.”
So that also has to be different. De Meo points out the enormous importance of the European car industry, which accounts for 7 percent of all employment in Europe and 8 percent of production workers and makes an equally large contribution to collective income. Moreover, the Renault boss states that it is the car industry where the most investments are made in Research & Development. Europe is also in danger of falling behind because we are too busy with our own rules and too small to make a stand against the emerging Chinese in particular, and according to Luca de Meo, something can be done about this in all kinds of ways.
