Europe: carmakers must cut output by 10-20%: Marchionne image

Fiat CEO Sergio Marchionne said Wednesday the European auto industry needs to cut its capacity by 10 to 20 percent in response to slack consumer demand. He expects that trend to continue through 2014.

“If volumes stay where they are, I think if you took out 10 to 15 percent of the capacity, maybe 20 percent of the capacity in Europe,” it would result in a sustainable level of production, Marchionne told reporters late Wednesday at the Detroit Auto Show.

Europe has around 200 auto plants that employ 2.3 million people, according to a European auto trade group.
European leaders have a great opportunity to transform the region, but must act quickly, Marchionne said.

“We are playing with fire. Europe is being called to task to solve a number of issues,” said Marchionne. “If we don’t acquire the confidence of the financial markets, the future of Europe is doubtful. We need to get serious — really serious.”

Fiat’s Italian plants are currently operating at less than 60 percent capacity, a situation Marchionne said is untenable and is mirrored by other European automakers.

Marchionne said Fiat’s future presence in Italy depends on the labor and manufacturing policies of Italy.

“If they keep on blocking the process, and I hope they will not, then I think Fiat will have no choice but to continue to reduce its exposure,” Marchionne said. “It’s for its own survival.”

The euro fell Wednesday, a day ahead of a closely watched meeting of the European Central Bank and as comments by an official with Fitch Ratings added to worries that Europe’s debt crisis will spread.

Industrial production in the euro region is forecast to have shrunk for a third month in November, according to a Bloomberg News survey before a report tomorrow by the European Union’s statistics office in Luxembourg.

“We see Europe deteriorating this year with the economy moving formally into recession,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp.