Brussels has bad news for Fiat and PSA, and by extension for Chrysler and GM. There will be no EU assistance for an orchestrated and painless capacity shedding, Financial Times Deutschland says. A report of an expert group puts European overcapacities at 25 to 30 percent. Fiat-Chrysler CEO Sergio Marchionne has been publicly lobbying for government support, PSA pressured the French government. As predicted here months ago, a lobby of German carmakers torpedoed any support from Brussels and is for Darwinian solutions instead. With carmakers at odds, European governments are happy that they don’t have to act. After all, there are more pressing problems in Europe.
Instead of a massive support program, the EU likely will announce feel-good measures with the efficacy of a band-aid. There will be the usual green programs, combined with less aggressive CO2 limits. None of this will solve the overcapacities, which will get more pressing as Europeans get more cautious with buying new cars. Chrysler’s new owner Fiat, GM’s new partner PSA, along with Opel and to some degree Ford, will be sliding deeper and deeper into the European morass.