Vw-Marchionne conflict gets back, this time on pricing strategy

Article by Christian Andrei, on August 1, 2012

Volkswagen Group made a threat to withdraw its membership from the European auto industry group ACEA in light of comments by Fiat CEO Sergio Marchionne that VW is being too aggressive in its pricing strategy. This clash is an indication of just how the tensions in the industry are rising as sales decline in Europe. Marchionne criticized VW’s methods, saying that conditions are difficult enough in the European auto industry.

VW denied his claims. In a statement, VW's chief spokesman Stephan Gruehsem said that the comments are proof that Marchionne is not qualified to be ACEA president. He is calling for the Fiat CEO’s resignation and said that VW may even be leaving ACEA. Marchionne is the president of ACEA with a term of one year.

ACEA lobbies the EU on behalf of the auto industry. He vacated the position left by Daimler CEO Dieter Zetsche on Jan. 1. The members of ACEA are all the European automakers and companies like Ford, General Motors and Toyota that have manufacturing operations in the region. A new president is elected by the board each year.

In Thursday’s report on The International Herald Tribune about an interview with Marchionne, he said that the European auto market is the toughest he has ever had to deal with. He said, “It's a bloodbath of pricing and it's a bloodbath on margins.”

VW Group sales chief Christian Klingler denied Marchionne's comments about being aggressive. He said that VW is operating in a “competitive environment." Klingler said that the European auto market is faced with an "elevated risk," as competition has become more intense. He added that auto pricing in Europe is "tense" and "pressure" will persist in the coming months.

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