Ford could cut even more of its European production this year in response to the economic slowdown according to Ford of Europe CEO, John Fleming.

While a year ago Ford was concerned it did not have enough capacity to meet demand, the global financial collapse has seen this trend reverse with Ford Europe already cutting capacity for the first quarter of 2009 some 214,000 units (to a planned output of 325,000 units) to meet the reduced demand for new vehicles.

“We will do whatever it takes to match capacity to size demand,” Fleming said.

Fleming went on to say that if the car market continues to deteriorate, further action could be taken and that production plans very much depend upon overall market sales, which at the moment appear artificially high for February due to adoption of scrapping programs by some countries.

“If scrappage schemes stop and the other underlying business hasn’t improved, than I do think that we will continue to see capacity have to be reduced,” Fleming said.

Governments in Germany, France, Italy and other EU markets have adopted scrappage schemes, which offer consumers cash incentives to swap old cars for new models.

Fleming said that Germany’s scrappage scheme has been a success and he would like to see it extended.

Fleming also said he hoped for more leadership from the European Union to address the auto industry downturn, such as an EU-wide vehicle scrapping program to support new-car sales and a freeing up of credit for consumers and auto dealers.

“I’m really worried at the moment that we are not getting that,” Fleming said. “Country-by-country, governments are really spending time worrying about their own industry. We are starting to see nationalism, protectionism and that is a concern.”