Japanese car manufacturers set to thrive under tighter emissions regulations

Three Japanese car manufacturers have ranked in the top five for their anticipated ability to adapt to the introduction of stricter emissions regulations in a new 'super-league' released today (6/02/15).

The super-league has been compiled by CDP in their research report – No room for passengers: are auto manufacturers reducing emissions quickly enough? Car manufacturers are ranked based on a number of emissions-related metrics which, when combined, may materially impact a company in an environment of tighter regulation.

“This research focuses on the application of emissions data for investor valuation and modelling purposes and places an emphasis on the most material metrics, such as product performance, as well as the impact of likely or known future events such as regulation being tightened.” CDP head of investor research James Magness said.

The research focuses on fleet emissions which make up 75% of total manufacturer’s emissions, and on regulation in the EU, US and China as car sales in these areas account for 83% of total global sales of those companies ranked.

Stringent Regulation

Nissan, Toyota and Mazda’s ultra-low emission vehicles and their efforts to reduce fleet emissions leave them best positioned to adapt their business models and benefit from regulatory change.

According to CDP, ultra-low emission vehicles will be key to sales growth over the next 5-10 years especially if China implements more stringent regulation in its megacity Low Emission Zones. Market leader in ultra-low emission vehicles Tesla is not ranked in the league as it did not choose to disclose information on its fleet emissions to CDP.

One of Nissan’s ultra-low emission models, the all-electric Nissan Leaf, was the highest selling zero-emissions car in Europe for the fourth year in a row in 2014 with a 26% market share. Sales increased by a third on 2013’s level.

Last month, Edie reported that sales of ultra-low emission vehicles in the UK increased four-fold in 2014 with 51,739 alternatively fuelled vehicles being registered.

General Motors and FCA are the worst performers for fleet emissions and according to CDP are at risk of receiving significant penalties in both the EU and US of potentially $1.7bn and $574m respectively. Ford is also singled out as being at risk of a penalty in the US of $889m.

“Our new research can better inform investment decisions and enable investors to engage with companies. CDP believes that the right regulation can enable change for the better. The top ranking auto firms are investing in greater engine efficiency and exciting new electric and hybrid vehicle ranges which will increase sales, help meet emissions targets and create cleaner air for us all.” CDP’s executive chairman Paul Dickinson said.

Lucinda Dann

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