Ford of Europe CEO John Fleming cast a disapproving eye on its competitors in Europe for cutting the prices of its new cars in order to sustain the levels that its cash flows and production capacity are at.
Sales have declined after the government ended its incentive programs. Fleming, who made the statements at the Automotive News Europe Congress, said that its rivals strategy of discounting excessively is a short-term solution that only devalues brands and helps weaken the entire industry in the longer run.
Trade publication Autohaus PulsSchlag said that last month, the average discount provided by Opel's dealerships in Germany was 12.8% off the list price, surpassing the 12.4% discount given by Fiat, the traditional incentive leader in Germany. The publication also noted that the industry averaged rebates of 10.9% in May.
Mass-market automakers such as Fiat, Opel and Ford have not been able to match the strong sales results last year because countries, including Germany, the UK and Italy, have ended their scrapping programs.
Fleming said that these profit-killing incentives are a result of the European auto industry's chronic overcapacity -- a problem that he thinks has to be resolved so that recovery will continue. It's currently estimated that the European industry has a 35% overcapacity.