Mediaboss Marketing

By Jennifer Clark

GENEVA/BRUSSELS (Reuters) - Under the lights of the Geneva motor show in March, Europe's top auto executives boasted about the new features of their latest models and tried to out-hype their rivals.

The next morning, in a hotel conference room just across the way from Geneva's convention centre, the same executives all sat down to work out how to fix their huge overcapacity problem.

At a board meeting of the European automaker's lobby group ACEA, the bosses of Volkswagen, Daimler, BMW, Peugeot, Renault, Fiat and Opel decided it was time to discuss the elephant in the room: plant closures.

"Their fear was of an all-out price war," said a source who was briefed about the meeting but declined to be named. "The negative fallout from that would be terrible."

The hard truth is that after more than four years of falling demand and profits, Europe's carmakers have yet to restructure or consolidate. Many factories are running at partial capacity - analysts estimate automakers have cut some 3 million cars, or 20 percent, from their production lines - and still producers struggle to sell their wares.

At the Geneva meeting, ACEA President Sergio Marchionne pressed members to call on Brussels for political cover to start shutting down factories.

"Closures should be co-ordinated at EU level," the Fiat and Chrysler boss told them, according to the person briefed on the meeting, to get around "a game of chicken" played by the producers where the first company to close plants would take the brunt of the cost and leave the rest to benefit.

A GAME OF CHICKEN

Europe's carmakers survived the initial economic downturn in 2009 by turning to national governments for help.

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INSIGHT - In Europe, carmakers talk plant closures