How bad are things getting? In an interview with BBC radio, European Union Industry Commissioner Guenter Verheugen decided not to sugar coat it.
He used the word ‘brutal’ and warned that the industry can expect to see some major changes as volumes collapse.
“The outlook for the industry is, to say the least, brutal. We have seen a dramatic decrease of car sales, especially in the last quarter of 2008 with a drop of more than 20 percent, and we expect another drop of 20 percent for 2009 that will affect hundred of thousands if not millions of workers,” Verheugen said.
“There is no guarantee that all the main European manufacturers can survive the crisis,” he said.
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The problems had been caused by a combination of a short-term demand crisis due to weak consumer confidence and production over-capacity in Europe, he maintained.
Verheugen also said that measures to support the industry are being looked at.
“First of all, I want to check whether member states are prepared to take coordinated action at European level,” he said.
One possibility is car scrappage schemes.
“The scrapping scheme combines a short-term economic incentive with a longer term environmental objective,” Verheugen said.
But a problem may be getting something that works across Europe. Verheugen noted that the amount of money paid as a scrapping fee varied greatly between member states, which he said would distort competition within.
