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Europe Has 18 Factories' Worth of Overcapacity

They say there's nothing bad about a little competition, but that doesn't apply to auto industry in Europe, which is currently operating at overcapacity.
Europe Has 18 Factories' Worth of Overcapacity 1 photo
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Bloomberg recently ran a story about the PSA factory at Aulnay, near Paris, which was recently after 40 years. The 3,300 workers protested until the very last moment, but to no result.

Statistics from IHS Automotive show that that factories in Europe, including the ones in Russia, have the capacity to make 26 million cars, about 7 million than they are currently making. They suggest that's what 18 factories the size of PSA's Aulnay would make. That's not a precise way to view the problem, but 7 million cars sounds like a problem.

Aulnay is closing as part of a wider plan from the French carmaker to cut 11,200 jobs by 2015. Ford is making a similar move by closing its factory in Belgium. As a response to this, employees even went as far as to hold a factory manager hostage. GM and Fiat are also facing similar problems with overcapacity.

Our say: Economies are like nature, nothing is lost, nothing is gained. Overcapacity means more competition for the existing customers who get better deals, better products and better customer care. The downside is all those laid off workers are a huge burden to the economy.
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About the author: Mihnea Radu
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Mihnea's favorite cars have already been built, the so-called modern classics from the '80s and '90s. He also loves local car culture from all over the world, so don't be surprised to see him getting excited about weird Japanese imports, low-rider VWs out of Germany, replicas from Russia or LS swaps down in Florida.
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