In an interview in the New York Times today, FiatFiatItaly, 1899 > present159 models
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and ChryslerChryslerUnited States of America, 1925 > present70 models
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CEO Sergio Marchionne continued to ask European automakers to work together to find a solution to the low auto sales sweeping the continent. He also turned his ire towards German automakers, especially VolkswagenVolkswagenGermany, 1938 > present98 models
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, for using discounts to cut costs and gobble up market share. 

“I’ve never seen it this bad. All the unresolved issues that have been plaguing the industry for a number of years have all come forward," said Marchionne. 

Marchionne has asked for the European Commission to step in and attempt to stem the problem in the past, but he has received little support. In Marchionne's view, the weakened European automakers like Fiat, PSAPeugeotFrance, 1882 > present120 models
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and OpelOpelGermany, 1863 > present85 models
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need to put up a concerted effort to fix things. 

“What they should do is coordinate a rationalization of the industry across the producing companies. The ones that really have not acted on this are the French and the Germans, who have not taken out any capacity at all. Everybody should take haircuts," he said. 

The problem with Marchionne's statement is that the Germans are still doing relatively well, especially Europe's largest automaker Volkswagen. It posted a 6.7% increase in profit today in the first half of this year and only lost money from two divisions - SeatSeatSpain, 1950 > present29 models
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and VW Commercial Vehicles. Mercedes-BenzMercedes-BenzGermany, 1924 > present197 models
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revenue was up 5%, but net profits were down about €200 million compared to the second quarter of last year. BMWBMWGermany, 1918 > present87 models
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has yet to release its financial results for the second quarter. 

In comparison, FordFordUnited States of America, 1903 > present92 models
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and PSA are both on track to lose about $1 billion in Europe this year.

Marchionne also claimed that the deep discounts being offered on cars in Europe are just making the situation worse.  

“It’s a bloodbath of pricing and it’s a bloodbath on margins,” he said.

As we reported last week, European automakers are cutting prices both at the showroom and corporate level. Fiat is giving Italian buyers a card that gets them gas for €1 a liter and gives them a free €1000. In Spain, RenaultRenaultFrance, 1898 > present189 models
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will give you a TwizyRenault TwizyFrance, 2010 > present3 photos
1 video
electric car, if you buy as Espace or LagunaRenault Laguna Gen.3France, 2007 > present125 versions
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.

It appears that the only solution to this problem will be to cut workers and close factories. PSA has been attempting to do this at the Aulnay factory but facing opposition from the new Socialist government and labor unions. Opel, Fiat and Ford have all also at least hinted at plans to close factories running under capacity. 

Source: New York Times