Europe's ailing carmakers seek overcapacity fix

Wed Mar 7, 2012 8:45am EST
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By Jennifer Clark and Laurence Frost

GENEVA (Reuters) - 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 overseas competitors.

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 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."

Peugeot (PEUP.PA: Quote) Chief Executive Philippe Varin said he would support EU action to tackle the problem.

France's Peugeot has just sealed a deal with U.S. automaker General Motors (GM.N: Quote) targeting cost savings through production on shared platforms that it hopes will help it speed up international growth.

The alliance highlights the pressing overcapacity problem as well as workers' fears over 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.

Varin, who formerly headed British steelmaker Corus, told reporters that Brussels should draw lessons from earlier successful intervention in that sector.   Continued...

Visitors walk around booths during the second media day of the 82nd Geneva Auto Show at the Palexpo Arena in Geneva March 7, 2012. The Geneva Motor Show will take place form March 8 to 18, 2012. REUTERS/Denis Balibouse