European carmakers need to cut their output by at least 10% to reflect falling sales, according to an industry heavyweight.
Sergio Marchionne, chief executive of Italian car manufacturer Fiat, said car output may even have to be lowered by 20% if companies are to survive the effects of plummeting demand.
Citing the problems caused by the eurozone debt crisis, Mr Marchionne voiced his concerns that the market may stay stagnant until at least 2014.
The eurozone debt crisis, which has seen some of the region's struggling economies desperately fighting to avoid bankruptcy, has caused widespread instability in the European markets as well as plummeting consumer and investor confidence.
Research carried out by accountancy firm Pricewaterhouse Coopers backed up this statement, showing annual car sales to have dropped by 2.5 million since peaking at 16 million in 2007.
Mr Marchionne, speaking at a press conference, went on to say that European leaders can still rescue the industry, but that they must act quickly to do so.
Copyright Press Association 2012