Fiat’s Marchionne Says German Peers ‘Deaf’ to Call for EU Help
Fiat SpA (F) Chief Executive Officer Sergio Marchionne said German carmakers are sticking to their opposition to his efforts to form a united front to push the European Union to address overcapacity in the region.
Calls for coordinated efforts have “fallen on deaf ears, certainly from my German colleagues, who do not see the need,” Marchionne, who is also head of Chrysler Group LLC, told reporters today in Detroit.
Volkswagen AG (VOW), Daimler AG (DAI) and Bayerische Motoren Werke AG (BMW) are resisting a proposal by Marchionne, who currently serves as president of the European auto association ACEA, to seek support from the EU to reduce surplus assembly lines in the region. Overcapacity in western Europe may more than double to about 2 million vehicles in 2012 with sales on pace to fall for a fifth straight year, according to data from IHS Automotive.
German carmakers have been less exposed to Europe’s woes because they produce vehicles in the region that are in demand in the U.S. and China, while PSA Peugeot Citroen (UG) and Renault SA (RNO) of France and Italy’s Fiat are more reliant on the local market. UBS estimates that the cost of excess capacity in Europe totals 7.4 billion euros ($9.7 billion) a year.
With national authorities in Europe prone to protect local jobs, the lack of a coordinated plan is “like asking people to argue against self-interest,” Marchionne said. “It’s almost an impossible situation.”
Fiat shut a factory in Sicily at the end of 2011 and may close a second plant in Italy as Marchionne expects the auto market to remain at the current level for two to three years. Fiat reiterated yesterday that it will present a plan, including new models and plant utilization, to stem losses in Europe at the end of October.
Peugeot, Europe’s second-largest carmaker after Volkswagen, announced in July plans to close a French factory and eliminate a total of 8,000 jobs. General Motors Co. (GM) has said it has no plans to produce new models at a plant in Bochum, Germany.
Volkswagen threatened to leave ACEA in July after Marchionne suggested in a report in the New York Times that discounting by the German carmaker was creating a “bloodbath.”