Peugeot backs call for EU common policy

PSA Peugeot Citroën’s chief executive has endorsed growing calls for a common policy in Europe to solve the car industry’s overcapacity and competitiveness problems.

Philippe Varin on Wednesday echoed Sergio Marchionne, Fiat chief executive, in urging Brussels to take a leading role in helping carmakers restructure in order to pre-empt beggar-thy-neighbour interventions by countries on behalf of individual car plants.

“If we say that the EU has an industrial policy, I think that in the situation of overcapacity, the political side should support its industry when it has to make restructuring in the different countries,” Mr Varin said.

He said that Europe needed concerted action of the type taken by Washington in 2008-09, after the financial crisis pushed North America’s car industry to the brink of collapse.

“If you look at what happened in the US at the time of the crisis, there was very strong support from the US government”.

PSA, its new alliance partner General Motors, Ford Motor, and Fiat are losing money in Europe because of falling demand and excess plant capacity, which have unleashed a brutal price war that is eroding their profit margins.

In 2009, EU states kept their carmakers afloat with scrappage subsidies and direct loans, such as France’s €6bn for Peugeot and Renault, without forcing them to restructure. The European Investment Bank also floated a low interest credit line for carmakers’ investments in low-emissions technology, but Brussels did not address the thorny issue of closing plants at producers whose operations straddle borders.

Industry lobbyists have urged Brussels to forge a common policy for carmakers in meetings with EU officials, including José Manuel Barroso, European Commission president, and the commissioners for industry and employment affairs.

Mr Varin spoke after a meeting of chief executives in Geneva on Wednesday organised by Acea, the European carmakers’ association. Ways of aiding carmakers on an EU-wide basis figured on the agenda, said two people briefed on the meeting.

“A European solution is better than the current situation where you have member states distorting the internal market,” one industry lobbyist said. “If you distort the internal market, you weaken competitiveness.”

Carmakers are not looking for a financial bailout similar to the US government’s restructuring in the bankruptcy of General Motors and Chrysler in 2009. Instead, they aim to tap into existing EU funds for research and development and labour market adjustments.

Peugeot and GM’s Opel business have both hinted that they may need to close plants in Europe. Opel’s restructuring in 2008-09 prompted jockeying by several European governments to protect their plants.

Mr Varin, a former chief executive of Corus, said the EU needed to take an active role in helping the sector restructure, as it did with the steel industry in the 1990s.

“There was a problem, it was addressed at the EU level, and it was addressed very efficiently,” he said. “So why don’t we draw some lessons from the past? “

Source : FT


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