Public support for the European car industry: an integrated analysis


Grigolon, Laura ; Leheyda, Nina ; Verboven, Frank


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URL: https://ub-madoc.bib.uni-mannheim.de/32671
URN: urn:nbn:de:bsz:180-madoc-326718
Document Type: Working paper
Year of publication: 2012
The title of a journal, publication series: ZEW Discussion Papers
Volume: 12-077
Place of publication: Mannheim
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Subject headings (SWD): Subvention , Kraftfahrzeugindustrie , EU-Beihilfenkontrolle , Konjunkturpolitik , Wirtschaftskrise , EU-Staaten , Schrottprämie , 2000-2011
Abstract: 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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Grigolon, Laura ; Leheyda, Nina ; Verboven, Frank (2012) Public support for the European car industry: an integrated analysis. Open Access ZEW Discussion Papers Mannheim 12-077 [Working paper]
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