Peugeot Expects Rivals to Close Plants in Europe Too image

Peugeot is certain that rival automakers will be forced to close plants in Europe too, to deal with overcapacity.

Chief Executive Philippe Varin told Les Echos said that as the European market struggles with overcapacity for some time now, it will be inevitable for certain plants on the continent to be closed. The French automaker expects a 12% drop in the country’s auto market this year.

“We’ve laid out our plans, but other manufacturers will have to take similar steps. Some of our competitors in Europe are losing even more money than us on every car they sell. The current situation is untenable,” he said.

Ford announced it will cut several hundred jobs in Europe to avoid a loss of $1 billion in the market. Ford has lost $404 million in Europe in the second quarter and the third-quarter results, which are expected in October, won’t look pretty either.

Ford reported a 29% loss in August, Fiat and GM each with 18%, the biggest decline since a 9.2% drop in February. Germany, the country which helped offset declines in the other markets, saw its sales drop 4.7%. Auto sales in Italy dropped 20%, in France 11%, Spain saw an increase of 3.4% and so did the UK with 0.1%.