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Franco-German standoff in troubled industry

France bans sales of Mercedes models

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26.07.2013 - 17:04

As Europe's industry is showing further signs of distress, France and Germany's stand off continues. Paris took formal steps on Friday to outlaw sales of several Mercedes models  over parent company Daimler's use of a refrigerant banned by the European Union.

France said it will maintain a sales freeze on the Mercedes A-Class, B-Class and CLA after the German luxury carmaker contested the move in court.

Registrations "will remain forbidden in France as long as the company does not to conform to European regulations", the environment ministry said in an emailed statement.

France has halted sales of Mercedes cars assembled since June 12 because of Daimler's refusal to stop using the air-conditioning coolant R134a, banned from new vehicles since the start of the year. Reuters news agency reports that the blocked models account for most of the brand's French business and 2 percent of global deliveries.

An administrative court had ordered France on Thursday to re-examine the case after Daimler argued that the sales freeze had not followed the correct EU "safeguard" procedures.

Daimler reacted angrily to Friday's announcement, calling it "absolutely incomprehensible" and vowing further legal action.

The dispute centres on a German decision to let Daimler continue using R134a - a global-warming gas 1,400 times more potent than carbon dioxide - because of safety concerns about the replacement chemical R1234yf.

The EU's "mobile air conditioning" (MAC) directive bans R134a in vehicles approved for sale since the start of 2011, but those certified earlier have until 2017 to comply.

The auto industry agreed to adopt the Honeywell coolant after extensive testing, but

Daimler broke ranks last year and said its own tests had identified unacceptable risks.

German Transport Minister Peter Ramsauer has urged Brussels to let Daimler continue using the banned coolant until the KBA completes further crash-test analysis in coming weeks.

However, safeguard procedures allow EU governments to halt sales of the Mercedes cars until Brussels decides whether their KBA certification complies with European law.

Industry in crisis - France hit hardest

While Europe's two major car producing nation have been squabbling over coolants the continent's car industry showed further signs of distress on July 23 when new data revealed car sales were down 6.6 percent for the first half of the year compared with the same period in 2012.

The European automakers' association, ACEA, said the car industry also had its worst June in 17 years, with demand falling 5.6 percent from a year earlier. 

urope's car industry has long struggled from overcapacity at factories and uncompetitive wages and labor laws, and the region's economic crisis has compounded these problems, as consumers put off big-ticket purchases.

To cope with the dwindling market in Europe, automakers have announced factory closures and put off new car launches in a bid for survival and to return their struggling European operations to profitability.

One surprising bright spot was Portugal, which, though mired in recession, showed a bump in sales of 2.9 percent for the first half of the year. It could be that after putting off buying new cars for so long, some people are now simply forced to get rid of their wrecks. The market in Britain also seems to be gathering steam, up 10 percent for the year.

But most places clocked deep slides. For January through June, registrations fell 8.1 percent in Germany, 11.2 percent in France and 10.3 percent in Italy. Tiny Cyprus, which agreed to a bailout in March, saw the biggest slide, falling 42.7 percent this year.

mid the poor performance in the first half, most carmakers saw significant declines in sales. France's PSA Peugeot Citroen was one of the biggest losers, with a 13.3 percent decline; Italian automaker Fiat dropped 10 percent.

But some luxury brands bucked the trend. Sales for Mercedes were up 3.5 percent, while Jaguars' rose 15.5 percent and Land Rovers' 10.2 percent. Honda also pulled away from the pack of everyday cars, posting a gain of 6.4 percent.