Chrysler’s Machionne says auto industry must reduce factory capacity in order to survive

Chrysler CEO: World supply of cars outpaces demand

DETROIT — The global auto industry must reduce factory capacity in order to survive, especially in Europe, Chrysler Group LLC CEO Sergio Marchionne said Wednesday.

World automakers can build 94 million cars and trucks a year, Marchionne told the Automotive News World Congress. But that’s 30 million more than it can sell, he said.

Bankruptcies and economic struggles have forced cuts in North America, but European manufacturers have not closed plants, often because they are paid by governments not to, he said.

He predicted the global auto industry will be consolidated into five or six companies.

Marchionne also said Chrysler has not decided if it will challenge Congress’ decision to require arbitration for 789 dealers whose franchises were revoked during the company’s passage through bankruptcy protection.

Marchionne’s speech was interrupted twice by protesters. One man yelled “Shame!” in Italian, and Marchionne later said the man was protesting Fiat’s plan to close a factory in Sicily.

Another said her mother was killed by a defective Chrysler product. Both were escorted out of the room.

Marchionne said Fiat loses money on every car built at the plant in Sicily. He did not respond to the woman’s statement.

The Chrysler CEO said the company will survive this year by being cheap, saying it still has cash reserves of $5 billion to $6 billion.

“You know the concept of hibernation Canadian bears use?” he asked when asked how the company will survive its sales slump with no immediate new products.

Chrysler sales were down 36 percent last year.

Marchionne conceded that the only new thing it is displaying at the Detroit auto show is a new interior in the Dodge Caliber compact.

But he said the Fiat 500 minicar will be in the U.S. in December.