Ford Europe is calling for urgent action to tackle severe over-capacity in Europe that is hampering automakers’ ability to deliver profit.
Addressing delegates today (23 June) at the Automotive News Europe Congress in Bilbao, Spain, Ford Europe chairman and CEO John Fleming said it was “unbelievable” the industry had not tackled the surplus issue together.
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“You have more than 35% over-capacity in the European industry – a figure that has obviously increased in the recession – 35% just seems too much,” he said.
“It seems unbelievable to me that as an industry we have not successfully addressed our over-capacity problem. Over-capacity is fueling distortion in the market [and] is not a sustainable way to run the industry.”
Warming to a political European theme, Fleming reiterated his desire for the EU to provide impetus for the recovery, but bemoaned a move to strengthen ties with South Korea.
“I am perplexed by the European Commission’s [decision] to approve the EU-South Korea agreement when the European industry is still weak. It looks like an own goal,” he said.
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By GlobalData“It will not allow us advantageous access to the Korean market and will only [result] in a one-sided flow of vehicles between Europe and South Korea. We need a more long-term strategic vision. You could call it an industrial policy that unites Europe, not divides it.”
Fleming also cautiously welcomed European government support for the auto industry although he stressed it had to be implemented on “an equitable basis.”
Citing the fact almost every major automaker had applied for such support, he conceded the aid had been highly significant at a pan-European and national level.
“The EIB loans have been applied for and received by almost every auto manufacturer in Europe [and] there has been no anti-competitive or market-distorting effect,” he said.
Equally, Fleming estimated European scrappage schemes – “a lifeline” – had added some 2.5m units to the industry last year and, without such state support, markets “could have literally collapsed.”
However, Fleming hit out at “some national automotive companies” who had in his view, received preferential treatment to the exclusion of competitors.
Although declining to name the operations, Fleming described this as: “Europe at its worst. It is a return to national self-interest and we need to guard against it”.
