The boss of Vauxhall Motors has warned that European Car Manufacturers are currently oversupplying cars to the continent and that continuing this business plan is unsustainable.
Speaking at the Geneva Motor Show, Duncan Aldred said that the current ‘production glut’ is due to firms basing production targets on pre-credit crunch figures, where it was estimated that 20 million cars will be sold in Europe by 2014 instead of current predicted figures of about 12 million. Mr Aldred also said that the industry cannot support the current level of capacity, and must move to a different business plan.
Oversupply in Europe stands at about 20% a year or 3 million cars a year if it is calculated on a two shift basis according to Renault.
The announcement comes after Vauxhall’s parent company, General Motors, revealed a £471m loss. GM have considered closing their Ellesmere Port Facility, although state that the pound’s competitiveness against the euro gives the UK a strong advantage. UK car sales have fallen to their lowest since 1994, but there is a 5.8% increase in the number of cars produced. Nissan also announced the creation of 2000 new jobs at their Sunderland plant and supply chains.
The Chief executive of Fiat, Sergio Marchionne, called for manufacturers to find a common solution to fix the problem, drawing parallels with the state of the American car market in 2008, when the US government bailed out General Motors and Chrysler. He said that there needs to be a structural fix that needs to be managed by the European Union as the holder of the single market.