European auto industry needs to close around 10 factories, Vw CEO says

Article by Christian Andrei, on September 18, 2013

About 10 car factories in Europe will have to shut down to ease overcapacity as a result of the region's struggling market, according to Volkswagen CEO Martin Winterkorn. However, Winterkorn said that there won’t be any cuts at VW because of the robust growth in the U.S., China and Russia.

However, Europe has excess capacity as auto sales throughout the region have fallen and have stayed at a level between 3 million and 3.5 million since 2007. By the end of 2014, there would be five vehicle manufacturing plants in western Europe shut down.

These are the plants of Ford Motor, General Motors' Opel unit, PSA/Peugeot-Citroen and Volvo. Plants that have recently closed include Opel’s factory in Antwerp, Belgium, and a Fiat plant in Termini Imerese, Italy.

According to restructuring consultants AlixPartners, it’s estimated that just 60% of European car plants will have its operations at the 70% to 80% level of capacity utilization required to be profitable this year, a 40% increase compared to 2011 figures.

The consultants also said that in the upcoming years, the region will have to lessen capacity by 3 million units to attain a sustainable utilization level since the market will stay flat. [source: automotive news - sub. required]

Topics: vw, europe, factory

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