One in five automotive companies is in danger of collapse, according to European Union vice president Günter Verheugen.

He told a conference in Paris today: “We need a strong, independent, and competitive automotive industry in the European Union.”

Referring to the French government considering supporting its vehicle manufacturers in return for a capital stake, he warned against “privatising profits during the good times, and socialising losses during the bad times.”

Verheugen said he expected restructuring and consolidation and that some overcapacity in existing plants would disappear.

“In the long term, production of all small cars will be transferred from western to eastern Europe,” he said.

Small and medium-sized enterprises would be worst affected, but he added there were many such companies that had enough capital to get through a crisis.

Verheugen said there was room for some help from the European Investment Bank (EIB), and that the development of ‘green’ products would help.

Practically every vehicle manufacturer is already in talks with the EIB, according to the German press agency, dpa.

“We must also watch carefully what the new US president does with the US automotive industry. Washington should not do anything to distort competition or disadvantage European vehicle manufacturers,” added Verheugen.