Plant Utilization in Europe: Improving, But. . .

European OEMs are improving their capacity utilization, but there is still a way to go


Facebook Share Icon LinkedIn Share Icon Twitter Share Icon Share by EMail icon Print Icon


Audi Ingolstadt

Manufacturing at Audi Ingolstadt (Image: Audi)

According to LMC Automotive, the capacity utilization rate in European factories is 71%. While this might strike some people in U.S. operations as underutilization (after all, 71% utilization means that 29% is going unutilized), according to LMC’s James Norris, senior analyst, the European OEMs have actually shown a marked improvement given that in 2009 the utilization was 58%.

As Norris writes, “While the 13 percentage-point increase over 10 years may appear relatively modest, after factoring in the obstacles to workforce reduction—such as political sensitivities and the influence of trade unions—it is quite impressive.”

Which just goes to show you how conditions aren’t necessarily uniform on a global basis, no matter how often people talk about the “global industry.”

Norris anticipates the potential of reaching an overall capacity utilization of 75% by 2026. This would be a good thing for the European OEMs as that figure, he notes, “has long been regarded by the industry as the profit threshold.”

Obviously, profitability is important to any OEM. But it is particularly key in terms of what is going on in Europe, where there is a tremendous investment in the “future of mobility” by the companies. He cites a figure from the European Automobile Manufacturers’ Association that has it that the companies are spending €57.4 billion per year on this endeavor.

If it took 10 years to get a 13 percentage point increase, then perhaps getting a bump of four points over the next six years should be achievable—although this might be a little like dieting, with the last few pounds being tougher to lose than the first 15.

Related Topics


  • Designing the 2019 Ram 1500

    Ram Truck chief exterior designer Joe Dehner talks about how they’ve developed the all-new pickup. “We’ve been building trucks for over 100 years,” he says. “Best I could come up with is that this is our 15th-generation truck.”  

  • Nio Plant Venture Lands $1.5 Billion Investment

    Chinese electric-car startup Nio Inc. is forming a manufacturing joint venture with Beijing E-Town International Investment and Development Co., which is investing 10 billion yuan ($1.5 billion) in the business.

  • 2019 Lexus ES 350 Introduced

    The Lexus ES sedan is more than just an offering within the company’s lineup.