Fiat and Chrysler CEO Sergio Marchionne told reporters this week that he still believes that the European auto industry will need to shrink in size in order to remain profitable and competitive.
Marchionne has been a vociferous supporter of a downsized auto industry that would address issues with assembly plant overcapacity in Europe and North America. European brands have sliced prices in order to remain competitive with Asian automakers, but Marchionne warned that trimmed list prices will decimate profits in the long run.
“I sincerely hope my colleagues are honest enough to admit the fact that pricing strategies in Europe are just not sustainable in the medium to long-term,” Marchionne said in an interview with the Financial Times.
Marchionne pointed his sights directly at France’s auto industry, which consists of two major players – PSA Peugeot Citroen and Renault- Nissan. French automakers are routinely cited as the most inefficient vehicle producers because of how their low pricing structures and high assembly costs offset profitability. The ebullient Italian executive stated that while General Motors’ Opel unit and Fiat have trimmed their plant footprint in Europe, France’s dominant players have remained stagnant.
You have not seen this from the French who have not taken capacity out,” Marchionne stated.
The executive spoke only in vague terms, not specifying just where he would see fit for Europe’s major brands to reduce production capacity and further consolidate their operations, however.
References
1.’Fiat CEO says…’ view
