EU seeks powers over car regulation after Volkswagen scandal

Brussels: The EU on Wednesday pushed to take control of car regulation in Europe in the wake of the Volkswagen scandal, unveiling proposals that would grant Brussels new powers to impose huge fines and recall vehicles.

The European Commission, the executive arm of the 28-nation EU, said carmakers found cheating on pollution tests could face a fine of 30,000 euros ($32,600) per vehicle, with non-compliant cars wrongfully approved taken off European roads.

"The commission is proposing a major overhaul of the so-called EU type approval framework," the European Commission said in a statement, referring to the system to approve cars for use on European roads.

The commission would also win powers to police national regulators with random checks by Brussels-led teams, amid widespread criticism that regulation currently handled by member states is too cosy with the auto industry.

"With our proposals today we will raise the quality and independence of vehicle testing and improve the oversight of cars already in circulation," EU Industry Commissioner Elzbieta Bienkowska said.

Brussels further demanded that pollution testing in member states no longer be paid for by car companies, but instead through a government fund to avoid the risk of a conflict of interest in granting approvals.

VW practices "are not only shocking but underline the need for change. We must make sure it never happens again," commission Vice President Jyrki Katainen said at a news briefing.

But the proposals will take at least months and possibly years of negotiations among EU lawmakers and national governments before implementation, almost certainly including a furious fight from Germany`s powerful car lobby.

"It boils down to giving away national sovereignty to Brussels," Bas Eickhout, a Dutch member of the European Parliament, told Bloomberg.

ACEA, the powerful Brussels-based auto lobby, said it took note of the proposal "and will now analyse in detail its implications on the industry."The EU has been particularly embarrassed by the VW scandal, in which Europe`s biggest car maker was found to have fitted 11 million diesel engines worldwide -- including 8.5 million in Europe -- with devices aimed at cheating emissions tests.

Critics accuse the Commission of having turned a blind eye to years of clear evidence that Volkswagen was using software to cheat on emissions tests, with Brussels afraid to take on Germany`s biggest industry and employer.

"This proposal clearly goes in the right direction as a first step towards breaking the incestuous bond between the auto industry and national authorities," said Karima Delli, a Greens MEP.

The system of approving car models in Europe -- known as type approval -- is currently based on "mutual trust", with a go-ahead by a national body carrying weight throughout the 28-country EU. 

But the new measures fall short of replacing this system with a fully-fledged EU regulator, instead providing fixes to "current flaws in the system", the commission said.

The EU is also battling VW to compensate European customers in the same way as its US customers over the emissions test scandal, with Bienkowska pressing the company`s CEO on the issue when she visited Brussels last week.

In the United States where Volkswagen is under investigation, the company has offered a "goodwill package" of $1,000 in vouchers to buyers of affected cars.

The same offer in Europe would cost VW in the region of $8.5 billion.

NGO Transport & Environment in a statement warned that in addition to Germany, major EU powers Italy, Britain, Spain and France would also fight the proposal, keen to protect their car industry.

"This good proposal addresses many flaws in the current car testing system but lacks teeth," said the group`s director Greg Archer.