German automakers opposing to EU plant closure sustained by Marchionee image

After Chancellor Angela Merkel warned against overstraining the resources of Europe’s biggest economy, Volkswagen (VW), Daimler (DAI), and BMW (BMW)are resisting calls by Fiat (FI) Chief Executive Officer Sergio Marchionne for the European Union to support the closing of unprofitable auto plants in the region.

Marchionne spoke at the launch of the CARS 21 report, the work of a panel comprising industry, governments, trade unions, consumers associations and environmental lobbies.

What the report said on restructuring – which often involves shutting down plants and relocating them to where cheaper workforce is available – is that they “should not be resisted,” but their impact should be “minimized” through “dedicated” social policies.

Analysts agree that Europe desperately needs the same sort of restructuring the U.S. automotive industry went through during the recent economic crisis.

It’s clear that the situation in Europe is in the red area.
The drop in European car sales accelerated in May to 8.4 percent, the eighth consecutive monthly decline, according to ACEA figures released today. Peugeot, Fiat and Renault SA have posted the steepest slumps in Europe this year, plummeting 15 percent or more in the first five months.

“We don’t see any recovery this year”, Serafim from inautonews said.

“A lot depends now on what happens on June 17. I don’t want to exaggerate the value of that vote, but it is going to be the catalyst for a variety of decisions.”

The idea is that a breakup of the single currency is possible.

The disruption on world markets from a breakup of the euro would be huge, Marchionne said. European car sales would drop by about 2.5 million vehicles to fewer than 10 million in the first year. They are already forecast to fall for a fifth-straight year in 2012 to about 13 million.