Sweden is heading for a showdown with its flagship Volvo brand over gas-guzzling SUVs, as the political backlash against them spreads across Europe.
Stockholm's minority government is being pressed by its Green and Left Party partners to levy a new tax on SUVs which could add up to €6,500 to the price of Volvo's popular XC90, Sweden's single biggest export.
French officials are finalising plans to tax polluting vehicles, particularly SUVs. London's mayor, too, is studying measures to combat SUVs, portraying them as the scourge of the congested city.
But Sweden is the first country to take on its powerful motor industry on the issue. French carmakers have been relaxed about the tax plans, as Renault and PSA Peugeot Citroën specialise in smaller cars, neither selling an off-roader. Britain has almost no locally owned automotive industry.
Hans-Olov Olsson, chief executive of Ford-owned Volvo, says plans to add an extra shift at its Gothenburg factory to meet demand for the XC90 would be scrapped if the tax went through. "You can forget the 600 new jobs we are planning," he says. Volvo also estimates the increased production would have created another 1,500 jobs at suppliers.
Peter Eriksson, Green party spokesman, dismisses Volvo's threat as "rubbish" - 95 per cent of its off-roaders are exported.
However, Olsson's warning has sparked alarm among trade unions in Sweden, making it likely the SUV tax will be fought. Göran Persson, the Social Democratic prime minister, faces rising concern about unemployment, and relies on Green and Left parties for his parliamentary majority.
SUVs have been growing in popularity across Europe, angering environmentalists who say the heavier vehicles emit more greenhouse gases. Consumer groups are also concerned about the safety of other road users.
Ken Livingstone, London's mayor, has called SUV drivers "complete idiots". He says: "These are not cars which people should be using in London."
So far this year, SUV sales are up 14 per cent in western Europe, according to analysts at Jato Dynamics. The 515,581 sales mean more than one in 20 cars sold is an off-roader. Manufacturers, including VW, Ford, Opel, Fiat and Audi are rushing new models out.
Yet SUV drivers rarely venture off road. The vehicles are nicknamed "Montessori jeeps" in Stockholm's affluent suburbs, as their main purpose is to take children to exclusive nursery schools. Toyota, whose RAV-4 is the European off-road market leader, says only about one in five SUV owners drive off-road for pleasure at least once a month. "They meet needs and they meet a fashion desire as well," the company says.
France is still deciding whether to tax the vehicles, possibly by €3,200 on new models. Smaller, cleaner cars may get tax credits of up to €700.
Earlier this year Bob Lutz, GM's vice-chairman, said: "I have a great deal of trouble with a government, whether regional, national or local, banning any one type of vehicle," he said. "That begins to smack a little bit of a totalitarian regime. There is a tremendous amount of class struggle tied up in the whole SUV thing."
- Financial Times Service
(Additional reporting by Richard Milne in Paris)