FRANKFURT (Reuters) - Car industry executives from around the globe urged Europe’s politicians to take bolder steps to solve the bloc’s two-year-old debt crisis, warning its single currency could be derailed without more decisive action.
The euro was under pressure again on Tuesday with debt markets increasingly pricing in a Greek sovereign debt default and the U.S. government voicing its alarm at Europe’s inability to get a grip on the crisis.
U.S. President Barack Obama expressed his concern in an interview with Spanish journalists published on Tuesday and U.S. Treasury Secretary Timothy Geithner will take the unprecedented step of attending a meeting of EU finance ministers in Poland on Friday.
The leading lights of the car industry, gathered in Frankfurt for the annual auto show, agreed that European policymakers had allowed the crisis to drag on too long.
The car industry, with production sites scattered across the continent, has always been one of the strong supporters of the single currency. Before the euro it had to juggle costs and sales in multiple currencies.
Sergio Marchionne, chief executive of Italy’s Fiat FIA.MI and U.S. carmaker Chrysler, was most outspoken, warning that without a decisive resolution the single currency could “go off the rails.”
“The problems must be confronted in a serious way...We are not totally calm about this instability and the way in which the European crisis is being managed,” he told reporters at the car show.
He warned of a difficult year ahead for the European auto industry “unless we start giving certainties to financial markets, building a bit of confidence in the system that at the moment is lacking.”
Ford Europe (F.N) Chief Executive Stephen Odell said Europe’s leaders need to act fast.
“My request to the politicians is even if the medicine’s painful — and there’s a lot of painful medicine out there — we need to apply it quickly and robustly so we can have a sustainable base.”
Although they expressed frustration, there was little advice on offer for the politicians as they grapple with the debt crisis, but Odell summed up the views of many.
“I just want to see some agreement, stability and people sticking to that. In business, there’s nothing worse in life than uncertainty and we’ve got a whole lot of uncertainty.”
“You need fundamentally to know if this is one boat or not, and if it’s one boat, fix it,” said Ghosn. “Who’s inside the boat, who’s outside the boat and fix it.
“The problem is that uncertainty at this level is going to generate more damage than even taking a solution, even if it’s not the perfect solution.”
Daimler’s (DAIGn.DE) support for the single currency was undimmed by the crisis but its Chief Executive Dieter Zetsche was clear that if Greece is eventually forced to exit the single currency it should be done in a way that protects the integrity of the bulk of the euro zone.
“We are clear proponents for a strong united Europe,” he said.
“We believe it is the only way to be relevant on a global scale and that is definitely what we are hoping for and voting for.
“I am really supporting a solution which allows the euro zone to stay together. If ever it would be considered, as it has been discussed recently, that not all members might be part of this union, you have to combine that with a very strong guarantee about the other members. Otherwise you just go step by step and that is no choice.”
Zetsche admitted he has no “silver bullet” that would solve Europe’s problems but with the benefit of hindsight, bolder action at an earlier stage in the crisis “might have contained the insecurity in the financial markets and could have avoided testing one element after other.”
With the crisis now lapping at the shores of Marchionne’s homeland Italy [ID:nLDE78C075], the Fiat boss said his country must above all launch a credible response.
Italy is in the midst of pushing through an unpopular austerity package to try to avoid being the next domino to fall in the debt crisis.
“The world is watching us. I have met financial people here in Frankfurt, and they are all watching Italy and how the problems are resolved,” Marchionne said.
So just how worried is the car industry?
“Of course I’m worried,” says GM Europe (GM.N) President Nick Reilly.
“It’s a shame for me that six months ago the political decision to support Greece was taken but still six months later there are still arguments about how, and that’s not good for Europe in total and therefore has encouraged the crisis to spread to other countries.
“We really need to get that political decision as fast as possible.”
Additional reporting by Edward Taylor and Stefano Rebaudo; Writing by Chris Wickham; Editing by David Cowell