Help To Sort Overcapacity, U.S. Style, Would Help Though.
Prospects for the European auto industry are being hampered by too little government action from one side, and too much on the other, according to UBS auto analyst Philippe Houchois.
Houchois told the annual Automotive News Europe Congress in Brussels that European governments were not doing enough to persuade auto makers to shed excess capacity which it needs for a return to profit. European factories are capable of building about four million cars a year than will be sold in 2014.
Jens Schattner, analyst with Frankfurt, Germany based Macquarie Research, has said in Europe over-capacity is currently between 30 and 35 per cent.
Houchois said action in the U.S., with huge financial help from taxpayers, had sorted out the problem of overcapacity there.
“In Europe if you take into account what has been done already in terms of capacity reduction and the chance of recovery in the European market, we are not going to see a balance of capacity and demand match in Europe in the foreseeable future,” Houchois said.
Meanwhile European governments were adding costs to the automotive industry with costly emissions control regulations, which makes every car more expensive to produce, he said.