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Volkswagen-Fiat fight changes up a gear

The Local · 27 Jul 2012, 10:56

Published: 27 Jul 2012 10:56 GMT+02:00

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Volkswagen on Thursday threatened to leave the European Automobile Manufacturers’ Association if Marchionne did not resign as president of the lobby group.

The move comes in response to comments by Marchionne published in a US newspaper on Wednesday accusing Volkswagen of pursuing an inconsiderate and destructive price strategy in Europe.

“It's a bloodbath of pricing and it's a bloodbath on margins,” said Marchionne, who went on to accuse VW of exploiting the crisis to its own advantage, wrote the New York Times on Wednesday.

Now Volkswagen is calling for Marchionne’s resignation. “Sergio Marchionne is unacceptable as president of the European Manufacturers Association and should go,” said VW chief spokesman Stephan Grühsem on Friday.

Grühsem went on to suggest that VW could simply leave ACEA – the highly influential lobby group made up of 18 European vehicle manufacturers. "In light of the comments, leaving the ACEA is also an option for VW," he said.

Marchionne’s company Fiat has suffered badly from the price war, along with PSA Peugeot Citroën and German manufacturer Opel, all of which rely heavily on the European market, wrote Der Spiegel magazine on Friday.

In France, Spain and Italy, the Euro crisis has led to a sharp slump in car sales, and overproduction has forced all manufacturers to reduce prices to try to persuade recession-hit customers to dig into their pockets, wrote the magazine.

Marchionne put VW noses out of joint earlier this year by saying another strong car manufacturer was needed to challenge VW’s dominance in Europe.

Until now, German giants VW, BMW and Daimler have avoided the European market squeeze by virtue of their strong exports, especially to China and USA. On Thursday VW posted profits of €8.8 billion for the first half of this year, an increase of 36 percent over the first half of 2011.

But the price war itself is a sign that German car industry is likely to hit trouble in the coming months, warned Ferdinand Dudenhöffer, head of the CAR-Center Automotive Research Institute at the University of Duisburg-Essen.

Story continues below…

A recent study by the institute suggested the record levels of special offers and price reductions being offered on new cars in Germany showed that demand could be slowly petering out here too.

DAPD/AFP/The Local/jlb

The Local (news@thelocal.de)

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Your comments about this article

12:20 July 27, 2012 by Peepopaapo
Fiat has simply chosen the wrong market due to bad management - instead of focusing on the Asian market they have focused on the European market which, as we all know, is not doing well at the moment. Now they are blaming others for their own faults.
13:31 July 27, 2012 by smart2012
VW is pushing EU sales with new models and promotions even if there is no real demand in Europe. U can clearly see this going to car dealers in germany which are sleeping on huge stock. And dealers are doing loans with VW bank, so at the end stock is owned by VW bank. What marchionne (supported by GM and Citroen) is saying is that VW is creating a car bubble, which sooner or later will explode. Do not confuse with Chinese market, cars anyway will be made in china for that market. And plants is Europe will have to close...
20:25 July 27, 2012 by Ozichick
In Australia VWs are still in the price range of most people while Fiat is over-priced and only affordable to a select few. Instead of finding scapegoats, Fiat should become a bit more competitive; it might sell more cars, in Australia at least.
21:16 July 27, 2012 by Navigator_B
It's been known for a long time that there is over-capacity in car production in Europe. Any car maker faces closure if they can't export outside of Europe.

If the Fiat boss wants to complain about unfair pricing, he should criticise the Euro. If the Deutsche Mark and the Lira are brought back, that would lower Fiat's production costs relative to Volkswagen's and Fiat could lower the prices of their cars.
20:37 July 28, 2012 by joysonabraham
I wonder why i don"t see those who advocate a closed Europe missing from these articles. I wish at least these kind news make them feel the need to be open and be engaging with everyone in the world, just to sustain ourselves. These engagements need flow of talent, tech and everything else back and forth. Culture mix ups are just a side effect on the path of survival.
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