Months after suggesting that Europe could get by with ten fewer car plants, Volkswagen’s Martin Winterkorn has reportedly said that despite overcapacity, the VW Group has no plans to close any of its European factories.
The mainstream media is now well-versed in the problems associated with overcapacity in the automotive industry; Honda hit the headlines recently when it cut 800 jobs at its Swindon, UK factory, blaming continued slow sales across Europe. And jobs are on the line too at PSA, Opel and Fiat. Those outside the automotive industry are also getting to grips with the notion of a widening gulf between the mainstream and premium OEMs: hours after Honda’s announcement, Jaguar Land Rover announced 800 new jobs at its Land Rover Solihull plant in the UK. A few weeks back, Nissan confirmed 1,000 new jobs at its Sunderland, UK factory, to build a new Infiniti model instead of a previously-planned C-segment Nissan hatchback; the lower annual output will be offset by the higher profitability of this premium model.
Globally, the high-volume European premium players – Audi, BMW and Mercedes-Benz – continue their title fight, and boast/bemoan a lack of capacity; at the other end of the scale, the burden of overcapacity sees Europe’s mainstream brands struggle to keep their factories going.
In the dark days of 2008, the US government set about overseeing the brutal restructuring of what it saw as a national automotive industry. The US market is now seeing rising sales, well short of pre-crisis levels, but 2012 ended ahead of expectations at around 14.5 million units, and 2013 is expected to see light vehicle sales breach the 15 million mark. In 2010, the US market fell to 10.4 million units.
In Europe, where a similar approach is long overdue, it’s not so easy, as Ivan Hodac, Secretary General of ACEA, makes very clear in this month’s lead feature.
‘Europe’ is not as unified as those outside Europe might think, and the automotive industry in Europe is far from being a European one. When it comes to responding to the crisis in the automotive industry, Europe’s national governments (naturally) look after their own. As a result – and despite the best efforts of certain leading vehicle industry executives – there is no ‘European’ response.
The solution, says Hodac, would be a European industrial policy that includes – and protects – the automotive industry. ACEA wants a competitive, slimmer and leaner European automotive industry – but accepts that this can only be achieved through a comprehensive strategy designed to address not just overcapacity but all key issues, including trade. Late last year, the European Council approved free trade negotiations with Japan, 18 months after a free trade agreement (FTA) with South Korea came into effect. Any FTA with Japan, says ACEA, would be detrimental to the European automotive industry; the FTA with South Korea, says ACEA, produced asymmetrical trade flow relations between the EU and South Korea. In our cover feature, Hodac discusses the implications of the numerous rounds of trade negotiations that Europe is conducting with other global markets, and emphasises the need to see the automotive industry as a strategic industry.
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Editor, Automotive World