According to the Detroit Free Press, German automakers are balking at coming to the aid of embattled peers in the region.
Volkswagen, Daimler and BMW are resisting calls by Fiat CEO Sergio Marchionne to push for European Union support to reduce overcapacity in the region.
A meeting between auto executives and the EU in Brussels did not advance efforts to shut unprofitable factories. If this deal is approved there will be additional layoffs and job cuts all across Europe which is not what many EU members wants.
"If you do a plan which distributes closures across countries, it's easier to sell it," Marchionne, who also serves as President of European auto lobby group ACEA, told journalists. "You can't ask Italians to be the only ones who feel the pain of closures. They should go to France, Italy, Germany."
Excess capacity in Western Europe may more than double to about 2 million vehicles in 2012 as sales fall for the fifth straight year, according to IHS Automotive.
The region's car market will contract 7% this year, ACEA forecast Wednesday.VW, BMW and Mercedes-Benz's parent Daimler use more than 90% of the capacity in their European factories, compared with rates of 60% to 75% for other carmakers in the region, according to Philippe Houchois, a London-based analyst with UBS.
European politicians generally agree that overcapacity is a problem, but they want jobs cut somewhere else. "It's ridiculous," Marchionne said. "We had a chance to discuss today with the Germans, and they say they have no plant to shut down. I know that at least two plants in Germany" are not doing well financially.
Though the automakers could close factories on their own, the political repercussions would be so broad that some of the companies would prefer to have cover from the EU.
"Marchionne's plan is a fairy tale," said Giuseppe Berta, a professor at Bocconi University in Milan, who has written several books on Fiat. "Europe has no funds, nor the political will, to help the auto industry with incentives to shut plants and reduce the work force.
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