Opinion: Is the EU threatened by a flood of pick-ups? Probably not.

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The current US President has often expressed his incomprehension and displeasure at the fact that there are so few US vehicles on European roads. Conversely, he has criticized the fact that there are many cars from Europe on US roads. One of the aims of his tariff policy, which can undoubtedly be described as aggressive, was to change this. Under an agreement between the Trump administration and the EU Commission, cars exported to the USA are subject to a 15 percent tariff. For cars that the USA imports into the EU, the duty is zero. At the same time, the existing US registration rules now also apply in the EU – and vice versa. This makes it easier for American manufacturers in particular to enter the European market. Is there now a threat of a glut of American giants on European roads? That is possible, but not likely.

USA as a production location

First, however, a myth needs to be dispelled, namely that of European manufacturers flooding the US market. Mercedes, BMW and Volkswagen have been building cars for the US market locally, i.e. in the USA, for some time now. The manufacturers are protecting themselves against the kind of scenario that the US President has now actually unleashed. This is another reason why some of the car industry's loud complaints should be viewed with a certain degree of skepticism. The situation is different from the perspective of US car manufacturers: their production sites in Europe are rare. They therefore benefit greatly from duty-free imports to Europe.

However, the fact that cars from the three major US manufacturers have so far been the exception on the European market is not only due to different registration regulations. In Europe, for example, the protection of pedestrians in the event of an accident plays a far greater role than in the USA. EU regulations are much stricter. The trade agreement threatens to soften them. What is approved in the USA will automatically apply in the EU in future – and vice versa. This regulation will eliminate a lot of expensive bureaucracy for manufacturers due to different approval procedures, according to the proponents.

Critics fear that if US cars are exported to the EU more easily and cheaply in the future, the EU will be threatened by a flood of oversized, under-regulated US pick-up trucks and SUVs. Antonio Avenoso, Managing Director of the European Transport Safety Council (ETSC), is among those warning against this. The environmental organization Transport & Environment (T&E) also sees the danger that the niche business of huge US cars could become a mass market.

Different preferences

For the time being at least, the chances of this happening are extremely slim, and there are several reasons for this. Foremost, average US customers have a very different idea of the ideal car than most European customers. Many models there measure considerably more than five meters, whereas the core business here involves much smaller cars. Pick-ups are very popular over there, but hardly in demand here. The workmanship and lining of the interiors are usually rather shirt-sleeved, although German manufacturers have allowed this former core competence to be taken out of their hands in recent years.

Deal breaker: consumption

However, the main argument against a mass collapse of typical US bestsellers is the usual consumption. In the USA, a gallon of fuel, i.e. 3.78 liters, currently costs between 3 and 4.5 US dollars, depending on the state. That's around 75 percent more than in 2019, but still pretty cheap compared to Europe. This is why consumption plays a different role in a purchase decision on the other side of the Atlantic than on this side. There may be car users who just shrug their shoulders at consumption figures of, say, 12 liters plus X. The majority of drivers, however, are likely to care whether they have to invest 10 or 20 euros in driving energy for 100 kilometers.

Of course, not all US cars are unrestrained drunkards, but the huge pick-ups and voluminous SUVs mentioned above can hardly be driven on five to seven liters of fuel – at least not for 100 kilometers. What's more, the price of fuel will play an even more important role in the calculations of most European drivers in the future. From 2027, the Emissions Trading System 2 (ETS 2) will come into force, which will bring two major changes. CO₂ certificates will then no longer be issued nationally, but traded on the European market. Experts assume that the CO₂ price will rise steadily over the next ten years. The price will be paid by the oil companies, who will of course add it to the price of petrol. Petrol and diesel will therefore gradually become significantly pricier from 2027.

It is therefore not too bold a hypothesis to assume that, although the number of pick-ups and SUVs of a considerable size will increase in percentage terms. There will by no means be a flood or even a relevant proportion of new registrations. The average car tastes of American and European buyers differ enormously. For this reason alone, I do not expect German city centers to soon be filled with masses of cars whose dimensions many drivers here are likely to find rather obstructive.

(mfz)