VW demands FIAT CEO to step down as Head of the ACEA image

Volkswagen AG, Europe’s largest carmaker threatened to leave the European Automobile Manufacturers’ Association if Fiat CEO Sergio Marchionne will not step down.

Marchionne accused yesterday VW of fueling an automobile price war that is contributing to steep industry losses in Europe. Marchionne, who is also head of U.S.
automaker Chrysler, had said Volkswagen was being too aggressive in its pricing strategy when conditions are already tough in the European auto industry.

The International Herald Tribune on Thursday quoted Marchionne as saying, “It’s a bloodbath of pricing and it’s a bloodbath on margins.”

The comments “show once again that Marchionne is not qualified to be ACEA president,” VW’s chief spokesman, Stephan Gruehsem, said in an e-mailed statement, calling for his resignation from the post. In addition, the German giant is also considering leaving the association.

“VW is using super-normal Chinese profits to subsidize a price war in Europe, and since it operates in the same currency as competitors, it no longer has the old ‘natural brake’ of a rising Deutschmark to slow its export success,” Max Warburton, analyst for Bernstein Research, wrote in a report dated July 18.

“VW’s gains in Europe look strangely reminiscent of Japanese gains in the U.S. in the 1990s.”

Volkswagen’s European market share increased from 22.6% in the first half of 2011 to 23.9% in the same period this year, taking into consideration that groupwide sales decreased 1.5% and the market fell 6.8%.

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