Public Support to the European Car Industry: The Impact of the Financial Crisis

Abstract

We provide a quantification of public support for the European car industry during the past decade. First, we identify the most relevant instruments of state aid and non-state aid public support. Second, we aim to estimate the amount of public support for European car manufacturers for each instrument and investigate its dynamics. 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 €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 other public support: scrapping schemes of at least €4.0 billion, and loans from the European Investment Bank of €2.8 billion, or an equivalent of €400 million of “aid element” .