There is still too much spare capacity in the global auto industry. That is, at least, what Fiat and Chrysler CEO Sergio Marchionne believes. He is particularly concerned about the situation in Europe where slow sales and a proliferation of manufacturers are likely to drive more of the firms to losses.
Overcapacity has led to increasingly fierce price-cutting in Europe as carmakers seek to maintain market share. “I sincerely hope my colleagues are honest enough to admit the fact that the pricing strategies in Europe are just not sustainable in the medium- to long-term,” Mr Marchionne said.
But, honestly is hard to come by among car company CEOs when the question of business combinations and capacity are concerned. GM (NYSE: GM), Ford (NYSE: F), and Chrysler nearly allowed their fortunes to be ruined as US car and light vehicles sales plunged through the recession. Better that GM and Chrysler go into Chapter 11 than to merger them.
But, some car firm management come by their skepticism honestly. The merger of Chrysler and Daimler was supposed to bring production and product development together to create scale. Instead, the deal created rancor and quickly fell apart.
Top Gaining Stocks
Top Losing Stocks