TRAVERSE CITY, August 3, 2011 (AFP) â€“ Time is â€œrunning outâ€ for European carmakers to address structural problems, Fiat chief Sergio Marchionne said Wednesday as he slammed government bailouts of his competitors.
â€œWeâ€™ve got to stop this intervention in terms of support. This is just unbearable,â€ Marchionne said, noting that France gave $8 billion to Renault and Peugeot in the wake of the 2008 financial crisis while Fiat â€œasked for nothingâ€ and â€œsurvived the crisis on its own terms.â€
â€œIn Europe, you canâ€™t do this if thereâ€™s an understanding that youâ€™re violating fundamental principles of equity and competition,â€ he told reporters on the sidelines of an auto conference in Michigan.
â€œOne member nation cannot favor local producers to the disadvantage of others. Itâ€™s built into the Treaty of Rome of 1957. We canâ€™t change our minds now.â€
The bailouts are just part of a broader failure by European industry and political leaders to take advantage of the crisis to deal with deep structural problems in the automotive industry, Marchionne said.
â€œThe truth of the matter is that the auto sector was already sick before the economic crisis forced it into intensive care,â€ Marchionne told Michiganâ€™s Center for Automotive Research conference.
â€œWe had been suffering from chronic problems, but had managed to either ignore or deny their existence for far too long.â€
Industrial inefficiency, production overcapacity and value-destroying market strategies â€œwent uncheckedâ€ while corporate culture was â€œmarked by unaccountability.â€
In the United States, industry, government, labor unions and financial institutions responded to the crisis by coming to grips with the inefficiencies, realizing that â€œthe realities of competition go beyond national bordersâ€ and working together to restructure the industry and put it on a â€œmore solid foundation for sustainable growth.â€
In Europe, however, the â€œlack of a common vision hampered and continues to hamper efforts to address deeply rooted structural problemsâ€ while government intervention gave an unfair advantage to some national players and artificially preserved unproductive capacity.
â€œThese responses underscore the reality that Europe is living in a kind of halfway house, combining a peculiar notion of a monetary union with limited economic, fiscal or political convergence amongst the member states.
â€œThere appears to be no immediate, obvious answer to the European conundrum, he added. â€œBut time is running out for all European carmakers.â€
The same lack of vision is also hampering the development of cleaner vehicles because European regulators keep trying to pick favorites among green technologies, Marchionne said.
â€œIf we are to achieve any serious reduction in emissions levels now, it is far more practical to leverage all available technologies in a coordinated manner,â€ he said.
After touting hydrogen, regulators – particularly in Europe – now appear to be looking to electric cars as a â€œpanacea.â€
â€œElectric propulsion could be a promising long-term solution,â€ he said.
â€œBut if regulators focus on promoting this solution alone, the outcome is absolutely predictable: capital overspend and sub-optimal results.â€
Marchionne noted that compressed natural gas remains a good option and said there are â€œstill many unexplored opportunities to substantially improve the efficiency of internal combustion engines.â€
â€œGovernment regulations will have the greatest positive impact if they are technology neutral,â€ he said.
â€œThis neutrality will ensure a rational allocation of capital â€“ one that will drive the highest possible fuel savings and reductions in greenhouse emissions.â€
That is what convinced most automakers to support U.S. President Barack Obamaâ€™s tough new emissions standards in a landmark agreement reached last Friday, he added. â–