With the European car market facing a decline in 2012, the focus is set to swing to that old chestnut, excess capacity. In a rising market, capacity utilisation may be going up and that can swing things so that vulnerable plants are kept in production. The 'rising tide' makes them look better than they really are and companies may feel that they can do without the distraction of shutting a plant and all the fuss it generates. But when the market is going down and capacity utilisation is deteriorating, it's less easy to put the issue to one side and carry on as normal.

Sergio Marchionne has been pretty vocal in lambasting the industry in Europe for not addressing overcapacity. And he is not at all happy about the pricing situation in Europe, either. Others are at fault, naturally.

GOLDING’S TAKE: Marchionne tells rival car makers to behave

But there was this news today regarding the NedCar plant in the Netherlands. That was one that was always likely to go, but I wonder how much more capacity reduction we'll see in (Western) Europe this year. It's an issue – supply and demand and where that leaves the market – that won't go away.

JAPAN: Mitsubishi closing Netherlands assembly plant in 2013

And Ford announced last week that it is trimming output at Genk.

I'm expecting to see LMC's Western Europe January numbers round-up later today, but indications are that January has been a tough month in the market. And the extreme winter weather now gripping much of the continent won't be helping the February sales figures either.

FRANCE/ITALY: January car sales sharply down in France and Italy

And you can hear more about the European market later this week (on Thursday)

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Until next time...

Dave Leggett
Managing Editor
Web: http://www.just-auto.com
Email: editor@just-auto.com
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