By on October 29, 2012

Fiat and Chrysler CEO Sergio Marchionne repeated its pleas that European governments should do something about the overcapacity in  the region. Being in Shanghai when he said that, he recommended that the Chinese government does the same. The governments likely won’t be enthusiastic about Sergio’s advice.

Said Sergio while the Wall Street Journal took notes:

“There is a demand-supply imbalance in Europe, and that needs to be addressed, which has been the reason why I have advocated European Union intervention. Somebody needs to control the process whereby this gets done before we end up creating nationalistic responses that are ultimately going to run right in the face of rational economic choices.”

Marchionne has been demanding that European carmakers take an equal haircut in capacity, something that had been roundly opposed by other EU carmakers, especially those in Germany. Brussels also has shown the cold shoulder to Marchionne’s suggestions. In the meantime, manufacturers like Ford started reducing capacity without government aid.

Overall car sales in Europe in 2012 are expected to be around 12.5 million vehicles, the lowest level since 1993.

Marchionne also suggested that Beijing should streamline its fragmented car industry that suffers from overcapacity and declining growth.

Marchionne repeated his old prediction that after a round of consolidation, only five or six global auto makers would remain. “I think you want at least one of those players to be Chinese,” he told the Chinese audience.

China currently has more than 100 carmakers. In 2011, some 50 carmakers made most of the 80 million automobiles built worldwide. Fiat recently opened a new plant in Chongqing, China, and is planning a few more for the coming years.

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6 Comments on “Sergio Gives Unsolicited Advice To EU And China Goverments...”

  • avatar
    Bela Barenyi

    Didn’t the Chinese government itself set the goal to reduce the number of Chinese carmakers ?
    Irememeber even reading here at TTAC an article about the Chinese government’s desire to
    consolidate the number of Chinese car companies.

    What I can’t hear anymore is the prediction that there will be only five or six global car companies in future. Sorry, people are saying this for years. Please correct me if I’m wrong, but one of the first ones was Mr. Honda back in 1990. He also said there will
    be five or six car companies.
    It’s 2012, and we have more car companies than in 1990. The last “noteworthy” bankcruptcy of a car
    company in Europe was MG Rover in 2005 (I don’t consider Saab as noteworthy, as Saab was a “walking dead” company, a disaster waiting to happen). And which was the last big car company which disappeared completly ? They seem to not disappear really. Very often the remains are absorbed by another car company. UK is I think the country who “lost” the most car brands/companies Europe. In Germany, there is only one notable company which went bankcrupt and disappeared after WWII:
    Borgward. In Italy, all were gobbled up by Fiat. In France, the last big brand which disappeared was Simca(after Chrysler Europe was bought by Peugeot). In the US, the last car company, which disappeared, was AMC (as only the Jeep brand still exists after the aquisition of AMC by Chrysler). And in Asia….can’t remember any car company which disappeared completly in the last 20-30 years.

    • 0 avatar

      In Germany, NSU was on the brink when it was acquired by VW in 1969; in the end, VW shut the marque down and converted the Neckarsulm factory to Audi production. VW also acquired Skoda and SEAT, for additional consolidation, and Renault bought Dacia. ZAZ bought FSO, and both Trabant and Wartburg shut down (VW and Opel bought the two factories, respectively).

      There was substantial consolidation in South Korea: Asia merged with Kia, and bother were taken over by Hyundai, Daewoo was bought by GM, SsangYong was bought by Mahindra, and Samsung Motors was bought by Renault. That’s five independent manufacturers that have disappeared in South Korea, even if many of the brands still exist.

      • 0 avatar
        Bela Barenyi

        Volkswagen didn’t buy NSU, they bought “Auto Union” from Mercedes-Benz in 1964/1965 and NSU merged with Auto Union
        in 1969. NSU brand was discontinued a couple years after
        the merger, in 1977, as the last NSU Ro80 rolled off the
        production line. It’s a defunct brand, but as Volkswagen
        is planning to have “budget” / no-frills brand, like Renault’s
        Dacia, Volkswagen could easily revive NSU (of course many
        people nowadays don’t know the NSU brand, but just look
        at Dacia…not many people knew of its existence till
        Renault bought and invested in Dacia.) So, NSU disappeared
        like Simca and Talbot: bought by another company and then
        dicontinued a little bit later. Im my opinion not comparable
        with Borgward or the downfall of UK brands (By the way, can
        anyone tell me what BMW wants to do with brands like Riley
        and Triumph? BMW still owns these brands, after they sold
        off most of the Rover Group. BMW doesn’t want to sell them,
        but they also don’t use them. Similiar like Peugeot, which
        still owns the SIMCA and Talbot brands. BMW could easily rebody
        the Z4 and other models and sell them as “Triumph” and they could easily reproduce/replicate the success of the MINI.)

        Asia, SsangYong and Samsung Motors are/were rather “minor” players. I always forget Daewoo, because I always considered them as just rebadged old GM products. I have to admit, I was not clear enough. I had companies in the size of Mitsubishi, Mazda or Suzuki in mind. (I know, MG Rover was a minor car
        maker at its end in 2005, but much larger at 1990, when BMW
        took the Rover Group and in 2005 the last British “volume” car
        By the way, we both forgot “DAF”! Bought by Volvo in 1975 and
        disontinued shortly afterwards.

      • 0 avatar

        @Bela, the point was company consolidation: NSU, the company, disappeared, as did DAF, Skoda, SEAT, Dacia, FSO, Wartburg and Trabant (at least as standalone entities).

        The largest consolidations in the last 20 years have been Chrysler (by Fiat), Nissan-Renault (though not yet fully consummated, Kia (by Hyundai), Daewoo (by GM) and Skoda (by VW). Although this is off the cuff, no hard data to back up this particular selection.

  • avatar
    The Doctor

    If Marchionne could market Fiat’s cars as well as he markets himself then there might be come hope for the company.

  • avatar

    I dunno, the consolidation is happening on a business side through mergers, the extinction of companies and the need to save by platform/engine/systems sharing. What is perceived choice in reality is much less IMO.

    Let’s play “who is selling a car one might consider buying new with own money”. Here’s my personal take (I’m based in Germany if that matters);

    * VAG Group: Zuffenhausen stuff can’t afford and a bit dull. The rest I find really boring. A2 could now sell, why not make some Vorsprung durch Technik again?
    * Renault Group: Cup Clio has just been neutered. GT-R expensive, 370Z lacks finesse.
    * PSA Group: nothing. Wake up guys, ask the gents that made your 80es stuff if they fancy a break from retirement?
    * BMW Group: nothing. Replace the monkeys that do the styling? I want a spirtual successor to the E30/36.
    * Mercedes: nothing. Gets worse every year.
    * Ford: next MX-5 possibly. Focus ST perhaps. Mazda 2 needs an engine.
    * Honda: nothing. When will they realize the CR-Z needs more power or less weight?
    * GM: nothing. Where’s today’s C20XE? Give Mr. Indra a ring?
    * Toyota: GT-86, at least test drive level of wantage.
    * Subaru: see Toyota.
    * FIAT Group: If the 4C gets built and comes in near weight / price target I’m in. No chance that is happening though. What did you do to Lancia, you “§$!”§!*?! You had such a winner with that Fulvia concept! Rest, meh. Maranello not my style, even if I could afford.
    * Mitsubishi: what happend to the Ralliart Colt? And to Ralliart for that matter?
    * JLR: to young for an XF. Rest meh.
    * Hyundai: nothing.
    * Kia: nothing.
    * Suzuki: Swift GT perhaps. Kizashi to close to GT86 price wise.
    * Geely: Why is C30 T5 is 1.6 tons? Rest also meh.
    * Lotus: basic Elise to slow for the price, rest also to expensive.
    * Aston: if I win the lottery.

    And I think that’s it. Good thing there’s something like a used market.

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