Fleet News

Over-capacity drives prices down

MANUFACTURERS face a tough, competitive future in the new Europe as monetary and regulatory pressures threaten margins. Over-capacity is already a serious issue for car makers in Europe, and the creation of a Euro trading zone is going to increase supply before it boosts demand.

Michael Marecki, Ford's EMU project director, said the automotive industry was already characterised by too many manufacturers pushing too many vehicles to too few customers. This would drive down front-end prices at a time when safety and environmental regulations were driving up production costs.

He added: 'Car manufacturing is a low margin business in Europe, averaging 2% to 3% returns, and an increase in costs with no increase in revenue will put a squeeze on margins. Price harmonisation will make it even tougher.'

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