Europe's top carmakers urge simple 'Made in Europe' rules

MILAN, June 12 (Reuters) - Automakers Volkswagen, Stellantis and Renault, which account for about 60% of Europe's car output, are urging the EU to adopt a simple "Made in Europe" rule and stronger incentives to boost local production.

In a joint letter sent to European Parliament members, seen by Reuters, the three groups called for 70% of vehicles sold in the European Union to source 70% of their value from within the 27-country bloc, covering the full value chain from engineering to manufacturing.

The EU has been weighing a "Made in Europe" framework as part of broader industrial policy during the shift to electrification.

While no final regime for vehicles is in place, policymakers are examining local content thresholds, state support and incentives linked to regional production to strengthen supply chains and reduce reliance on imports.

'UNPRECEDENTED CHALLENGE'

Volkswagen, Stellantis and Renault said they were committed to maintaining a strong manufacturing base in Europe, but this depended on a more realistic regulatory framework.

"European automakers face an unprecedented challenge to their competitiveness due to significant technology gaps in strategic areas, intense global competitive pressure and persistently high energy, manufacturing and regulatory costs," they said in the letter, first reported by the Financial Times.

The initiative builds on an earlier call by Volkswagen and Stellantis for the EU to shield its auto industry through incentives and favourable treatment for locally made electric vehicles.

The companies said demand remained weak in Europe, with around 3 million fewer vehicles sold annually than in 2019, underscoring the need for policy support.

They called for measures to encourage European-based manufacturing, including targeted support for battery production and greater regulatory flexibility, especially for small cars, to make EVs more affordable and support local supply chains.

"We want to offer clean, affordable, technologically cutting-edge cars to Europe's middle class," they said.

The automakers pointed to the EU car market's current 26% of imports as a reference point.

"Europe is not closing itself off. Europe only stops the trend of further outsourcing industrial production to third countries," they said.

(Reporting by Giulio Piovaccari. Editing by Mark Potter)