EUROPEAN car makers need to close more plants and cut jobs, executives warned yesterday as the industry battles snail-like economic growth and weak lending.
Speaking on the opening day of the Frankfurt motor show, the bosses of Ford Europe, PSA Peugeot Citroen and Volkswagen noted that sales in continental Europe appeared to be stabilising after five years of decline.
But recovery was not assured and likely to take years with the industry still needing to trim capacity to stem losses at some manufacturers and ease price pressures on all, they added.
The cautious outlook came as UK-based marque Jaguar – which on Monday unveiled its latest CX-17 concept car in Frankfurt – outlined plans to invest some £1.5 billion in a range of lightweight, aluminium sports cars and SUVs aimed at the mass market, creating 1,700 jobs in a UK economy showing signs of resilience.
The spending is part of a move to launch more affordable models from 2015 to emulate the success of lower-cost vehicles made by sister company Land Rover and compete more effectively with German brands such as Audi and BMW.
Jaguar, part of the Jaguar Land Rover (JLR) group owned by India’s Tata Motors, said the investment could create a further 24,000 supply chain posts.
At the biennial Frankfurt show, Peugeot, which incurred the wrath of French ministers and workers last year by scrapping a major factory and 8,000 jobs, said it will seek more plant cutbacks from trade unions.
Volkswagen chief Martin Winterkorn said the European industry could do with closing around ten factories, although he stressed the German car maker itself did not need to make cuts thanks to strong growth in China, Russia and the United States.
“Europe still has to be viewed with scepticism,” he said, adding sales across the region were down about three million to 3.5 million since 2007. He added: “Basically, it’s ten factories that could be closed… thank God there are other areas we have growth.”
Peugeot, which lost €5bn (£4.3bn) last year and clung to life with a share issue and a French government bailout, is more exposed to weaker southern European markets than many rivals, and also has less of a presence in the more robust luxury car segment.
Its chief executive, Philippe Varin, said shutting down more production lines was “exactly the discussion we are having”, but added he would present cutbacks to trade unions before announcing details.
Up-market brand BMW reported a 15 per cent jump in August sales to its highest-ever total for the month, but its chief executive, Norbert Reithofer, remained downbeat about prospects in Europe.
“At the moment, the problem child is Europe. We do not yet see light at the end of the tunnel this year,” he said, adding any improvement in the region was unlikely until the second half of 2014.
Ford Europe boss Stephen Odell also cautioned any upturn in Europe was likely to be modest and take years.