Marchionne warns the EU about overcapacity in the car industry image

Sergio Marchionne has asked European Union officials to find a common solution in order to end overcapacity on the continent’s car market.

Fiat’s CEO said at the Geneva Motor Show that the EU must take a lead role in rationalising carmakers’ excess capacity. Marchionne, who is also chairman of the European automakers’ association (ACEA), compared the current EU car market with the 2007-2008 US car market, before the bankruptcy of GM and Chrysler.

“There needs to be a structural fix which is local, and which needs to be managed and addressed by the European Union as the holder and repository of the notion of the single market. This is fundamental,” Sergio Marchionne was quoted as saying by the Financial Times. According to Fiat, PSA Peugeot Citroen and Renault’s estimates, Europe’s oversupply stands at 20 percent, or 3 million cars, if calculated on two shifts.

When calculated on a three-shift basis however, Europe’s car industry overcapacity stands at 11 million units, according to Renault’s COO Carlos Tavares. Carmakers are considering shutting down plants in Europe, with Peugeot and GM both hinting recently that they will do it. Since the beginning of the financial crisis, only two plants have been closed: the Fiat facility in Sicily and GM’s Antwerp unit.