The European automotive industry is a key sector for the European economy, providing over 12 million jobs and a positive contribution to the trade balance of around € 70 billion, which is essential for continued European prosperity. It provides the means of transport for the large majority of passenger and freight movements.

In the coming decade, important changes are expected in the global automotive industry in several areas that are likely to profoundly reshape the industry and its markets worldwide. While the European market has a low-growth perspective, third markets are growing fast, changing the trade flows and the automotive value chain. The intense competitive pressure is growing further and EU companies are increasingly being challenged on their home market.
To meet long-term greenhouse gas targets as well as air quality objectives, the internal combustion engine will be further improved and the development of breakthrough technologies, such as electrified propulsion, will happen. Sizeable efforts will also need to be made with the further development and distribution of alternative fuels to traditional diesel and gasoline fuels.

In order to analyse these challenges and develop a joint strategy for decision makers from the private and public sectors, the Commission decided at the end of 2010 to re-launch the CARS 21 High Level Group, which was originally set-up in 2005. It was one of the actions listed in the Commission Communication for a "European strategy on clean and energy-efficient vehicles2", adopted on 28th April 2010. The objective of the group is to make policy recommendations to support the competitiveness and sustainable growth of the European automotive industry. A network of strong, well diversified and competitive enterprises along the entire value chain must be at the heart of this strategy.

This Interim Report covers the group’s consensus3 on a number of selected topics discussed so far. Some may be further elaborated and further topics will be added in the rest of the CARS 21 process, leading to the adoption of the Final Report.

Ensuring a favourable business environment
CARS 21 confirms the need to ensure reliable and favourable framework conditions for the European industry as such and a need to continue implementing basic horizontal principles agreed during the first round of the CARS 21 initiative

Key messages:
1. Ensuring reliable and favourable framework conditions and continuous improvement of those conditions are a prerequisite to ensure the long-term competitiveness of the European automotive industry.
2. The cumulative effects of the different pieces of legislation affecting the automotive sector should be scrutinized in order to have an overall assessment of their economic, social and environmental impacts.