The crisis of over-capacity in the European car industry as sales continue to fall will become permanent without an EU-led coordination of cuts, Fiat-Chrysler boss Sergio Marchionne said at a meeting with European Commission industry officials in Brussels.

Marchionne is also head of ACEA, the European carmakers’ association. Previously, ACEA has said that members should reach their own decisions on plant closures and job cuts although Marchionne has always advocated Europe-wide action, a move that has found little support.

"I am concerned that if we don't find a collective will to resolve this at a European level this is going to become a permanent crisis," he said.

ACEA said sales have fallen in Europe for the past five years and new car registrations were likely to be down by between 8% and 10% this year.

Marchionne met EU industry commissioner Antonio Tajani and said he believes the EC should coordinate cuts.

"If the French government were to help one specific carmaker and were not to help us or another carmaker, it would breach the rules of the European treaties," he said, stressing that carmakers were not seeking money or financial support for this.

"It is better left to the European Commission, whose primary responsibility is the single market. If it doesn't intervene now it will violate its obligations to the single market."

He also wants the EC to delay signing any further free trade agreements (FTA) like the one concluded last year with South Korea. Marchionne said an FTA with the US would help Fiat and Chrysler a lot but would probably not be beneficial to other European carmakers.

Capacity in Europe needs to be cut before opening up the markets to imports othwerwise it would be like “having a flooded basement and pumping in more water with a garden hose to fix it. Let the European car industry make its adjustments ... This is not the time to embrace free trade," he said.