2nd ICAI 2022

International Conference on Automotive Industry 2022

Mladá Boleslav, Czech Republic

Analysis of the impact of stricter emission standards on the development of the share price of European car makers between years 2011 and 2020 David Grunt 1 , Tomáš Krabec 2 Prague University of Economics and Business 1 Faculty of Finance and Accounting, Business valuation department nám. Winstona Churchilla 1938/4, Praha, 130 67 Czech Republic ŠKODA AUTO University 2

Department of Accounting and Finance Na Karmeli 1457, Mladá Boleslav, 293 01 Czech Republic e-mail: dawe96.grunt@gmail.com 1 , krabec@is.savs.cz 2

Abstract This paper is devoted to the tightening of emission standards in the EU and their impact on the value of the largest European car makers. The paper focuses mainly on the reasons and links between the tightening of emission standards and the value of major European car makers on the stock market, considering both the technical view of the matter and, of course, the financial view. This paper puts its findings into perspective and considers current trends in the automotive industry and its prospects for the future. As a result, this paper compares the stocks performance of the biggest European car makers to the average performance of biggest European stock indexes such as CAC40 and DAX30 that all the chosen car makers are (or were) part of. The findings of the paper help to specify when and why the stricter emission standards in EU started to be considered as a threat to the automotive industry even by the investors on stock market. Keywords: car manufacturers, emission standards, European Union, stock market JEL Classification: G1 Asset Markets and Pricing, L51 Economics of Regulation, O32 Management of Technological Innovation and R&D 1. Introduction In the last couple of years, we had a chance to witness various restrictions and changes all over the world which only purpose was (and still is) to ensure slower global warming and cleaner world for the generations to come. However, these goals are not the priority number one for all governments. Especially for the developing countries the concern about pollution is not so important. On the other hand, the developed countries try to find a common solution and many countries are collaborating to reach these goals together. One of the means how these countries would like to reach carbon neutral future is to reduce carbon footprint of passenger cars with internal combustion engines (also known as ICE vehicles).

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