| GENEVA, March 7
GENEVA, March 7 Europe's carmakers,
desperate to beat the chronic overcapacity plaguing the
industry, are seeking a pan-European fix to a problem that is
eating away at profits and leaving them vulnerable to leaner
European car industry association ACEA discussed how to
intensify its lobbying efforts with the European Commission at a
meeting in Geneva on Wednesday as car manufacturers' fears grow
over the need to close plants in a withering car market.
"We cannot continue endlessly to deal with automotive issues
at the national level," said ACEA Secretary General Ivan Hodac
in an interview at the Geneva Auto Show. "We need an EU-wide
solution. But it is not easy."
But any regional strategy, mirroring the pan-European
structure of aerospace manufacturer EADS or the
cross-border restructuring of the region's steel industry, would
face fierce opposition from national governments as politicians
jealously guard manufacturing jobs.
Europe's carmakers are battling stinging price competition
in a region in which consumer spending power is stifled by
austerity measures. Analysts and auto industry executives
estimate the region has at least 20 percent too much car
Adding to the manufacturers' woes, a free trade agreement
with South Korea that took effect last July gave a boost to
South Korean automakers' sales in the region.
South Korea exported 438,767 vehicles to the EU and imported
78,762 vehicles from the region in 2011, government data show.
The ACEA is taking a tough line on possible upcoming free trade
talks with India, Japan and the Mercosur.
"If we continue opening borders without the possibility of
having access to the other country's market it's a slippery
slope," said Hodac, adding that ACEA would only support an trade
agreement with India if it completely dropped its import
The European lobby group has not yet tabled any sort of
proposal for EU-wide labour measures, Hodac said, but has
pressed commissioners hard for the EU to react to the increasing
competitive pressure on European manufacturers in a series of
meetings in recent days.
ACEA Chairman and Fiat chief executive Sergio
Marchionne will discuss future trade agreements at a March 20
meeting with the EU trade commissioner, officials said in
"Marchionne made the comparison with the steel industry.
What would help is EU-wide relaxing rules for firing workers,
making it less expensive," said one analyst who asked not to be
"It's an EU-level problem, because the EU put on a lot of
C02 limits which increase costs and the EU negotiates trade
agreements with Asian countries. So the EU could establish which
factories need to be shut and then provide the funds."
This would sidestep the problem that such measures would be
considered state aid if implemented on a national level, he
Not all the ACEA's members agree with the lobby group's call
to arms, however.
"I'm not at all calling for government aid," Bernhard
Mattes, head of Ford's German operations said on Wednesday in an
"A restructuring of companies must be carried out by the
companies," Mattes said.
Carlos Ghosn, chief executive of French carmaker Renault
and its Japanese alliance partner Nissan Motor
, meanwhile predicted the first European restructuring
moves could open the floodgates to a rash of plant closures.
At the moment, all European carmakers have capacity
problems, Ghosn said.
"But the day somebody's able to restructure heavily in
Europe, it's going to force all car makers to do it."
NATIONAL JOB WORRIES
The European auto industry has few tools at EU level that
can help it deal with Europe's overcapacity problem and while
ACEA may want a concerted approach, national governments are
loath to cede control of such a key political issue.
British business secretary Vince Cable was at the auto show
as part of a bid to save jobs in the struggling sector, his
presence highlighting the sensitivity of threatened plant
closures, which often mean the loss of thousands of jobs.
Britain got some good news, with Japan's Nissan Motor Co.
pledging to build a new compact car in Sunderland,
northeast England, but Cable was also due to meet General Motors
bosses to try to convince them not to close the Vauxhall
plant in Ellesmere Port in northwest England.
The U.S. carmaker's alliance with PSA Peugeot Citroen
highlights the overcapacity problem, and workers fear
mass job losses. GM said on Tuesday that the two car makers
would make their own decisions on sites, but the alliance would
not cause any plants to close. [ID: nL5E8E66OW]
"If the EU can do it for Greece, they can do it for the car
industry," the analyst said. "The main point is that they are
starting to talk about it."
Hodac said he had noted that the attitude in Brussels
towards the auto industry was changing.
"I am noticing more of a willingness to listen," he said.