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Public support for the European car industry: an integrated analysis
Grigolon, Laura
;
Leheyda, Nina
;
Verboven, Frank
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URL:
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https://ub-madoc.bib.uni-mannheim.de/32671
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URN:
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urn:nbn:de:bsz:180-madoc-326718
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Document Type:
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Working paper
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Year of publication:
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2012
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The title of a journal, publication series:
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ZEW Discussion Papers
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Volume:
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12-077
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Place of publication:
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Mannheim
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Publication language:
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English
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Institution:
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Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
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MADOC publication series:
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Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
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Subject:
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330 Economics
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Subject headings (SWD):
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Subvention , Kraftfahrzeugindustrie , EU-Beihilfenkontrolle , Konjunkturpolitik , Wirtschaftskrise , EU-Staaten , Schrottprämie , 2000-2011
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Abstract:
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We provide an overview of public support for the European car industry during the
past decade. First, we identify the most relevant instruments of public support, and
review their economic assessment. The European Commission increasingly recognizes
the role of economic analysis in controlling public aid to the car industry, although
the degree of economic assessment varies across di¤erent instruments of public support
and individual state aid cases. Moreover, the state aid legislative framework is open to
derogations and interpretations. In particular, the Temporary Framework, approved
by the Commission to tackle the last financial and economic crisis de facto implied a
relaxation of the state aid rules and foresaw no formal control of individual state aids.
Second, we aim to estimate the amount of public support for European car manu-
facturers. Three factors complicate the overall quantification of public support for each
instrument: (i) the Commission does not scrutinize, and hence does not quantify all
public support measures; (ii) the available information depends on whether the state
aid is granted to individual companies or in the form of general schemes; and (iii) the
available information depends on whether the aid is granted in the form of a grant,
soft loan or guarantee. Our lower bound estimate of state aid suggests that the aid
declined over the pre-crisis period, but peaked at EUR 1.2 billion as a response to the last
financial and economic crisis in 2009. Perhaps even more strikingly, this state aid was
combined with an unprecedented amount of public support granted through scrapping
schemes of at least EUR 4.0 billion, and loans from the European Investment Bank of EUR 2.8
billion, or an equivalent of EUR 400 million of "aid element".
In conclusion, the existence of multiple public support instruments at different levels
may create coordination problems and a lack of transparency, in spite of the Commis-
sion's efforts. The lack of transparency in turn poses a challenge for the quantification
of state aid and non-state aid support to any industry or sector. This paper provides
a first step towards informing the policy debate on the e¤ects of public support to the
car sector, and also stimulates the academic interest in the subject of state aid, and -
more generally - public transfers to companies.
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