Fiat CEO: Europe car problem needs Europe solution

AP News
Posted: Sep 27, 2012 11:55 AM
Fiat CEO: Europe car problem needs Europe solution

PARIS (AP) — The chief executive of Fiat and Chrysler thinks Europe's carmakers can only survive if they reduce their enormous overcapacity together, rather than retreating behind national borders to find piecemeal solutions.

Sergio Marchionne wants the European Union to coordinate continent-wide restructuring because when individual countries get involved, they only save plants on their home turf and end up injecting money to prop up hometown companies.

He said that closing plants is never an easy decision, but that the industry either had to scale back or risk catastrophe.

Marchionne discussed how to reduce capacity and other problems at the Paris Auto Show in the French capital.

— European solution: Europe has long had the ability to make far more cars than it could sell, but closing plants or firing workers has always been politically fraught and the boom years partially masked the problem. An auto industry report by Alix Partners says that Europe has enough factories and manpower to make about 7 million cars more this year than it actually will — and it won't even sell all of the 20 million it will produce.

It's that kind of waste that Marchionne says is unsustainable and that only the European Union can resolve.

"I think it would be much more beneficial if this became a European problem as opposed to a national problem," he said. "There's no flag that will fix this."

— Politics: Marchionne said, in fact, that governments often abet Europe's overcapacity problem. Labor rules in much of Europe make firing workers difficult and many governments step in to delay plant closures — as France has with a plan by PSA Peugeot Citroen.

"I've always lived by a very simple rule that the best thing a politician can do for me is get out of my way," he said.

He said too often governments abdicate their responsibility to provide a social safety net, instead forcing companies to keep on workers.

— Tiff with Volkswagen: Marchionne launched a zinger at bitter rival Volkswagen, where an executive predicted that one of Europe's carmakers would fail because of the tough market conditions.

"I don't not share the view," he said. "I find (the statement) completely reprehensible, particularly in a context as delicate as this one."

Marchionne has accused Volkswagen of using unfair pricing practices — a charge that led some at the German automaker to call for Marchionne to resign as head of an association of European carmakers, Acea.

"I have no particular interest in continuing my role (at Acea) without the support of the board but I also don't particularly give a flying hoot about what the CFO or the head of the press office of Volkswagen think," he said.

"If necessary, Fiat will withdraw from the association in protest but I think it's about time that we stop making noises and flexing muscles around the European arena in a way which is unbecoming of the larger automakers in Europe."