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Struggling carmakers want Europe-wide overcapacity fix

Struggling carmakers want Europe-wide overcapacity fix
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At the Geneva motor show the latest models being unveiled on stage were just window dressing for some who see an industry in crisis.

Sliding sales and overcapacity are pressuring profits and the manufacturers say Europe-wide action is needed with plant closures and big job losses.

That is politically problematic and was the subject of a meeting in Geneva between the carmakers’ trade body – the European Automobile Manufacturers’ Association — and European Commission representatives on Wednesday with more discussions to follow later this month.

“We cannot continue endlessly (to) deal with automotive issues at the national level,” said ACEA Secretary General Ivan Hodac. “We need an EU-wide solution. But it is not easy.”

Consumers have seen their spending power reduced by austerity measures and that is reflected in sales figures that are in their fifth year of decline, despite price wars that undercut profits.

Sales in January were 7.1 percent down on a year earlier.

Industry analysts and the companies themselves estimate Europe has at least 20 percent too much carmaking capacity which was discussed at the Geneva meeting on Wednesday.

Peugeot Chief Executive Philippe Varin said restructuring is needed and European government have to give their political support.

“The political side should support its industry when it has to restructure,” Varin said. “If you look at what happened in the US during the crisis, there was very strong support from the US government.”

Carmakers in North America closed plants and laid off workers when the crisis hit. Detroit’s Big Three automakers – GM, Ford and Chrysler, now partnered with Fiat, closed 13 plants between 2008 and 2012.

In Europe, with 241 plants in 27 countries, only three factories have closed or are slated to close over the same period.