Analysts predict that the overcapacity issue at European auto plants will improve in about three years.
“We expect the situation to get healthier when the production volumes will have recovered, i.e. on the 2016 to 2017 horizon,” said Denis Schemoul, head of Europe vehicle production forecasts for IHS Automotive.
Automakers have already started to close plants in the European market or make radical moves to fill capacity in the region. Renault-Nissan decided to transfer Nissan Micra subcompact production from India to Renault’s Flins plant located in France, although labor costs here are much higher. Two years ago Audi began manufacturing its Q3 SUV at Seat’s underused facility in Spain.
HIS data shows that more than half of the 160 auto plants in Europe have been operating at 70% of their maximum capacity during the first quarter. From January to March 85 plants operated at 70% or below.
“They think it’s two plants from Peugeot in France and two from Fiat in Italy. No, it is a broad problem felt across Europe,” said Philippe Jean, head of the automotive industry unit of the European Commission’s Enterprise and Industry Directorate General.
He added that European plants should run production three weeks per months, using one week to offer better training to workers.