UPDATE 1-Europe’s carmakers say economy far from stable

* European new registrations of commercial vehicles flat

* CO2 regulations for LCVs not viable-ACEA president

* European auto industry attacks trade deal with So.Korea
(Adds comments from ACEA president, background)

FRANKFURT, Feb 23 (BestGrowthStock) – The European auto industry
does not expect a quick recovery this year and warned sales of
commercial vehicles that closely follow the economic cycle
would “at best be flat” after dropping by one-third in 2009.

Speaking at the 2010 annual reception for the
Brussels-based industry body ACEA, President Dieter Zetsche
said any upswing was far from stable.

“If the economy looks better in 2010, it’s only when
compared with 2009. And that’s why it is so critically
important not to endanger whatever little stabilisation has
been achieved,” he said in prepared remarks.

Zetsche, who is chief executive of German carmaker Daimler
(DAIGn.DE: ), said the auto industry accounts for 35 percent of
all European manufacturing employment and nearly 380 billion
euros ($516 billion) of tax revenue.

Amid the bleak outlook for the commercial vehicles sector
— where new registrations fell more than 32 percent to some
1.71 million trucks, vans, buses and coaches last year —
Zetsche cautioned against stricter carbon dioxide (CO2)
emission regulations.

“Legislation needs to be reasonable and the target level of
135 grams CO2 per kilometre for light-commercial vehicles in
2020 simply isn’t. The tailpipe target system for passenger
cars just won’t work for light trucks,” the ACEA president
explained.

Zetsche said the shape of the auto industry would be
transformed by the game-changing trend toward zero-emission
mobility in the future and European governments needed to
actively participate in the process.

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“The U.S., China or Japan — and a number of other nations
— already have well-coordinated activities to encourage
research and development investment for sustainable mobility,
and they’ve reinforced these during the crisis,” he said,
calling for more loans from the European Investment Bank.
Zetsche also attacked the recent EU-Korea Free Trade Agreement
as not yet “passing the test” for being fair.

“Too many non-tariff barriers still exist for EU vehicles
exported to South Korea and there is no guarantee against new
ones being introduced,” he said.

Analysts say South Korean carmakers control about 94
percent of their market, the lowest level of penetration among
any developed country, due at least partly to local regulators
that do not recognise international test cycles and standards
and force imported cars to undergo costly modifications.

U.S. Trade Representative Ron Kirk said on Friday that
President Barack Obama will not submit a free-trade agreement
with South Korea to Congress for a vote until Seoul does more
to open its auto market. [ID:nN1972683]
($1=.7361 Euro)

Stock Market

(Reporting by Christiaan Hetzner, editing by Maureen Bavdek)

UPDATE 1-Europe’s carmakers say economy far from stable