Volkswagen Calls for Marchionne to Quit ACEA Presidency Amid Pricing Row
Volkswagen threatened to leave the European carmakers’ association unless Fiat CEO Sergio Marchionne resigns as ACEA president, following public accusations over VW’s pricing strategy.
Volkswagen AG has demanded that Fiat CEO Sergio Marchionne step down as president of the European Automobile Manufacturers’ Association (ACEA) after Marchionne publicly accused VW of driving a damaging price war in the struggling European market.
The dispute erupted after Marchionne, who also leads Chrysler, told the International Herald Tribune that Volkswagen’s aggressive discounting was worsening already steep losses across the European car industry. Marchionne described the situation as a “bloodbath of pricing and a bloodbath on margins.”
Volkswagen responded by questioning Marchionne’s suitability to lead the ACEA, the main lobbying group for Europe’s carmakers. In a statement, VW’s chief spokesman said Marchionne’s comments showed he was unfit for the role and called for his resignation. VW also said it was considering leaving the association if Marchionne remained in post.
Rising tension between European manufacturers
The row comes as European carmakers face falling demand and shrinking margins. According to industry analysis, Volkswagen’s European market share increased from 22.6% in the first half of 2011 to 23.9% in the same period of 2012. This gain came even as VW group sales fell 1.5% and the overall market dropped by 6.8%.
Marchionne argued that VW was using profits from its Chinese operations to subsidise heavy discounting in Europe, putting pressure on rivals who share the same currency and lack the benefit of a weakening Deutschmark that once acted as a natural brake on German exports. The strategy, he suggested, risked destabilising the market further. VW’s approach drew comparisons from analysts to the Japanese carmakers’ market share gains in the US during the 1990s.
ACEA leadership under scrutiny
The ACEA presidency is typically rotated among the heads of major European carmakers. Marchionne’s leadership came under fire from VW after his outspoken criticism of the group’s largest member. The public nature of the dispute raised questions about the ability of the association to present a united front as the industry faces regulatory and economic headwinds.
Marchionne’s dual role as CEO of both Fiat and Chrysler put him at the centre of industry debates on consolidation and competition. The row with VW added to the challenges facing his leadership at a time when Fiat was also managing its US operations and preparing for further integration. For more on Marchionne’s position at Fiat and Chrysler, seeFiat CEO Ready to Execute Chryslers Ipo to Own It 100.
Implications for the European industry
Volkswagen’s threat to leave the ACEA underscored the depth of the rift. A departure by Europe’s largest carmaker would weaken the association’s influence in Brussels and could make it harder for the industry to coordinate lobbying efforts on emissions, safety and trade policy. The episode also reflected the strain placed on carmakers by the prolonged downturn in European sales and the competitive pressures in a saturated market.
