The European Union needs to take on the task of slashing the continent’s bloated automaking capacity, according to Fiat and Chrysler Group chief executive officer Sergio Marchionne.
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Marchionne, who has long advocated a rationalisation of European automaking, noted that one third of the world’s 30m vehicles’ worth of excess production capacity is located in Europe but individual governments are unwilling to allow the market to act.
“Europe needs to embrace this and take this on,” he said after a speech in Washington yesterday. “You cannot leave it to the national governments to bring it about because it will not happen.”
Some governments in fact, are taking the opposite course, he said, pointing to France, which provided EUR8.5m (US$12.6m) in aid to national automakers PSA Peugeot Citroen and Renault.
He also singled out Germany, where the government has not permitted a single vehicle assembly plant to close since the end of World War II and recently worked with labour unions to interfere in the restructuring of Adam Opel, the troubled General Motors European division.
The deal Germany brokered to give Canadian autoparts giant Magna International and Sberbank of Russia a majority stake of 55% and management control of Opel would not have reduced capacity or even given Opel itself much of a chance of surviving, Marchionne said.
But he added in his speech that “no region in the world has reached the minimum level of capacity utilisation necessary to realise adequate returns on investment.”
In North America, Fiat’s new 20% owned subsidiary Chrysler has shed some capacity as have GM and Ford.
But he said he is so confident that a plan developed to restructure Chrysler with Fiat platforms, engines and other technology will be so successful that the third-largest Detroit company – still alive because of a bailout of about $15bn from the American and Canadian governments – will need to find new capacity.
He said he is working seven days a week, 24 hours a day running the two auto makers because, as CEO of both, he’s the only one in a position to perform “this blood transfusion that happens at the speed of light”.
He will likely give up one of the jobs over the next two years as the process of merging the companies becomes successful.
The restructuring plan unveiled on 4 November calls for Chrysler to double it sales to 2.8m vehicles a year by 2014 and increase market share to more than 13% from less than 9% this year.
But a 25% slump in US sales in November has led Chrysler to shut six of its 10 North American assembly plants for extra time beyond the usual Christmas shutdown, including almost a month at its Warren, Michigan, factory which assembles the Dodge Ram full-sized pickup and Dodge Dakota medium-sized truck.
