“It’s not possible with subventions to take jobs from each other without facing the main problem; the fact that we have an overcapacity on the manufacturing side,” he said as he arrived for an emergency EU summit in Brussels.
“We have the capacity to build 18 million cars in Europe, and the demand is down to 11 or 12,” he added.
Therefore the auto industry “needs to be downsized and I think it should be downsized in a competitive manner and in accordance with state subvention rules,” the Swedish leader insisted.
Major automakers France, Germany and Italy have announced support measures for the sector which accounts for 12 million jobs throughout Europe.
The French plan, which has particularly raised hackles in the Czech Republic, was declared non-protectionism by the European Commission on the eve of the summit.
Sweden also plans to help its auto sector but has not revealed details.
The government has refused though to become a shareholder in national carmaker Saab which is restructuring to become an independent unit after it was cut loose by its owner General Motors.