The merger of Chrysler and Daimler-Benz was motivated by the enormous excess auto capacity -- worldwide, probably 20 million units.

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Thomas Choi, an analyst for Samsung Securities, estimates that world auto manufacturing capacity now is 40% more than demand.

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As we have mentioned in previous articles, the European auto industry is plagued with overcapacity issues, but the labor unions and the governments have made it enormously difficult for the auto companies to reduce capacity in order to protect jobs.

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