EU CO2 Emission Standards: What Car Dealers Need to Know

Key points to cover in this section:

• Dealers often confuse two separate regulatory systems — this section clarifies the difference.
• Euro emission classes (Euro 1–7): regulate pollutants from individual vehicles — NOx, particulate matter, CO, hydrocarbons. These determine which vehicles can enter low-emission zones and pass inspections. Governed by vehicle type-approval regulation.
• CO2 fleet-wide targets: regulate average CO2 emissions across a manufacturer’s entire new vehicle fleet. These are the rules behind the “2035 ICE ban.” Governed by Regulation (EU) 2019/631. They do not directly restrict which used cars a dealer can sell, but they shape what manufacturers produce and what enters the used market.
• The practical difference for dealers: Euro class = “can this car drive into Paris, Brussels, or Barcelona today?” CO2 targets = “what kind of stock will be available at auction in 2028?”

These targets do not restrict what you can sell today. But they determine what manufacturers produce now — and therefore what enters the used market as fleet returns, lease-end vehicles, and dealer stock in the coming years. Understanding the timeline helps you plan your sourcing strategy.

The timeline

• 2021 baseline: 95 g CO2/km (NEDC) for cars — translated to WLTP-based targets per manufacturer
• From 2025: 15% reduction vs. 2021 → fleet target around 93.6 g CO2/km
• From 2030: 55% reduction vs. 2021 → fleet target around 49.5 g CO2/km. At this level, roughly half of all new cars sold must be electric or plug-in hybrid to meet the target.
• From 2035: 100% reduction → 0 g CO2/km. Under the current regulation, this means only zero-emission vehicles can be sold new. However, this target is under review.

What's changing (2025–2026)

• May 2025 — 3-year averaging adopted: Manufacturers can now average their 2025–2027 performance instead of hitting targets annually. Practical impact for dealers: slightly fewer EVs entering the market in 2025 than originally expected, compensated by more in 2026–2027.
• December 2025 — Commission proposed weakening the 2035 target: The proposed revision would change the 2035 target from 100% to 90% reduction, allowing some ICE and hybrid vehicles beyond 2035 if manufacturers use low-carbon steel and renewable fuel credits. This is still being negotiated in Parliament and Council, so nothing is final yet.

What this means for your stock pipeline

• 2026–2028: Expect a growing wave of 3-year-old EVs and PHEVs entering the used market as corporate leases end. These are often well-maintained, single-owner vehicles — attractive stock for dealers building EV competence.
• 2028–2030: The 55% CO2 reduction target pushes manufacturers hard. The used market will shift noticeably toward electrified vehicles. Dealers who are comfortable with EV sourcing, battery assessment, and EV-specific logistics will have a competitive advantage.
• Diesel supply is already tightening at the new-car level. Several manufacturers have dropped diesel from their new model ranges entirely. This means the used diesel supply will eventually shrink — but slowly, over 5–8 years.

Penalty context (for fleet managers specifically): Non-compliant manufacturers pay €95 per g/km above their target, per vehicle registered. This incentivizes aggressive EV pricing and leasing terms — which in turn produces more used EVs at lower residual values. Fleet managers can leverage this dynamic when negotiating lease returns.

Key points to cover: Over 320 LEZs and zero-emission zones exist across Europe. LEZs use Euro emission classes, not CO2 targets, to restrict vehicle access. This is where the Euro standard directly impacts value and sellability.

France — Crit'Air System

• Covers Paris (permanent ZFE), Lyon, Marseille, Strasbourg, Grenoble, Toulouse, and expanding
• Crit'Air 1 = Euro 5 and 6 petrol, Euro 6 diesel + all EVs and PHEVs
• Paris bans Crit'Air 4+ permanently; Crit'Air 3 restrictions tightening

Germany — Umweltzonen

• Green sticker (Grüne Plakette) required in around 60 cities — effectively Euro 4+ petrol or Euro 4+ diesel with DPF
• Less restrictive than France — most Euro 4+ vehicles still permitted

Belgium — LEZ in Brussels, Antwerp, Ghent

• Brussels: Diesel Euro 5 minimum (from 2025); tightening to Euro 6 diesel by 2028
• Antwerp and Ghent: similar trajectory

Netherlands — Milieuzones

• Amsterdam, Rotterdam, The Hague, Utrecht + others
• Primarily targeting diesel Euro 6 minimum from 2025

Spain — Zona de Bajas Emisiones (ZBE)

• Madrid 360, Barcelona ZBE, and all municipalities 50k+ required to implement ZBE
• DGT label system: 0 (EV), ECO (PHEV/CNG), C (Euro 4+ petrol, Euro 6 diesel), B (Euro 3 petrol, Euro 4–5 diesel)
• Vehicles without label (“A” = pre-Euro 3) banned in many ZBEs

Poland — Strefy Czystego Transportu (SCT)

• Kraków first city with active SCT (from July 2024); Warsaw planning
• Still relatively early stage compared to Western EU — but growing

Key points to cover in this section:

• NEDC (New European Driving Cycle): old test procedure, used until 2017. Lab-based, often unrealistically low CO2 and consumption figures.
• WLTP (Worldwide Harmonised Light Vehicle Test Procedure): replaced NEDC from Sep 2017 (new types) / Sep 2018 (all new cars). More realistic driving patterns, longer test, higher speeds.
• Practical impact: WLTP values are typically 20–25% higher than NEDC for the same vehicle. A car rated 120 g/km NEDC might show 150 g/km WLTP.
• Why dealers care — registration tax: Some countries calculate registration taxes based on CO2 values. A vehicle's tax liability may differ depending on whether the NEDC or WLTP figure is used:
  • France: switched to WLTP for malus écologique calculation in 2020
  • Netherlands: uses WLTP for BPM calculation
  • Portugal: uses WLTP for ISV calculation
  • Denmark: uses WLTP for registration tax
  A vehicle with a NEDC value just under a tax threshold may cross that threshold when the WLTP value is used, resulting in significantly higher registration cost.
• COC contains both values (if applicable). Always check which value the destination country uses for its tax calculation and use that figure in your landed cost estimate.

A significant portion of EU used car trade flows to non-EU destinations — North Africa, Western Balkans, Middle East, and West Africa. Several of these markets have introduced or tightened emission import restrictions:

• Morocco: Euro 6 required for all imported vehicles since January 2024. This has significantly impacted the flow of older diesel vehicles from EU markets to Morocco.
• Tunisia: Age restrictions (typically 3–5 years depending on vehicle type) effectively limit imports to Euro 5 and 6 vehicles.
• Serbia: Euro 3 minimum for import; tightening planned.
• Albania, North Macedonia, Kosovo: varying restrictions, generally Euro 4 minimum or age-based limits that correspond to Euro 4 and 5.
• Bosnia-Herzegovina: age limit of 10 years for imported vehicles.
• Nigeria, Ghana, Côte d'Ivoire: age-based restrictions (5–10 years) that practically require Euro 4+ vehicles.

Practical checklist for dealers:

• When buying at auction: Check the exact Euro sub-stage, not just “Euro 6.” Verify via COC or registration certificate (field V.9).
• When selling into EU markets: Research the destination city's LEZ rules. A vehicle's LEZ eligibility directly impacts its market value in that area.
• When selling to non-EU markets: Verify the destination country's emission or age import restrictions before committing.
• CO2 value matters for registration taxes in NL (BPM), PT (ISV), FR (malus), ES (IEDMT), DK, and FI. Always use the correct test cycle figure (WLTP vs. NEDC) for the destination market when calculating landed cost.
• Plan your EV strategy: More EVs and PHEVs will enter the used market from 2026–2030 as fleet leasing returns accelerate. The Euro 7 battery durability requirements (from 2027 new cars onward) will eventually create a floor for used EV battery quality.