200,000 Sales Lost In First Two Months, 2.5 Million Since 2006/7
Sales Forecasts Range From Down Five To Eight Per Cent
GM Europe Wants “Sustainable Profitability”; Some Hopes
American automotive CEOs perfected the knack in the late noughties of sounding as though happy days were here again while their companies were collapsing around them.
Former leaders of General Motors and Chrysler, with the honourable exception of Ford, will have some sympathy for Europe’s big car manufacturers at the Geneva Car Show. Many European CEOs face a year of big losses because of a weak market where sales can only be achieved with substantial bribes to buyers.
According to IHS Automotive analyst Paul Newton, Europe is already some 200,000 sales down in just two months and has lost some 2.5 million sales from its peak in 2006/07, leaving many manufacturers with unsustainable business models for the current size of the market. IHS reckons sales in Western Europe will drop five per cent this year, although that’s not as severe as the eight per cent forecast by GM Europe.
GM’s Opel-Vauxhall and Ford Europe lost money in 2011 and will probably lose more in 2012. Renault of France kept in the black last year, but its financially troubled compatriot and GM alliance partner Peugeot-Citroen bled red ink, as did Fiat in Europe.
Talk of the need for restructuring echoed around Geneva. Some reports raised the possibility that panic was beginning to set in as GM was said to have toyed with idea of revisiting its failed alliance with Fiat.
Hyperbole, bluster
That didn’t stop the hyperbole and bluster as the covers came off the new European cars for 2012. The new cars rarely promised anything new in the way of technology. The development of electric cars and hybrids seems to be on hold for now. But many of the new automobiles promise even tougher problems for the mass car manufacturers, with luxury makers from Germany offering affordable, smaller cars, which will take a bite out of the sales of standard vehicles. Audi, VW’s luxury subsidiary, unveiled its new little A3, which threatens family cars like the Ford Focus. Mercedes showed its new A class which competes in the same sector, as does Volvo’s new V40. Pressure is mounting from below too, with Hyundai of Korea and its Kia stable-mate unveiling new cars.
There was no shortage of over-the-top expensive new cars, with the Porsche Boxster, Aston Martin V12 Zagato, Maserati GT Sport, BMW 6 Gran Coupe and the Ferrari F12 Berlinetta. Bentley, Britain’s luxury car company which is owned by VW of Germany, showed off its new SUV.
Humdrum
More humdrum reveals included the Fiat 500L, a small minivan and a bigger version of the cute little 500, the Ford B-Max, another minivan, and the little Peugeot 208.
Karl-Friedrich Stracke, General Motors vice-president and CEO of Adam Opel AG, in a presentation at the show, unveiled the new Mokka, a sub-compact SUV. The Mokka is based on engineering from the Buick Encore. Missing from Stracke’s presentation was any hint as to how the overall European market might perform this year. In an interview later, Stracke said sales in Western Europe would probably fall eight per cent this year, at the high end of analyst’s expectations.
The Germans made some upbeat noises, with BMW and VW posting strong sales forecasts for 2012. Volkswagen said it was confident it would overtake Toyota as the world’s biggest car manufacturer this year, after a strong performance in 2012. BMW expects global sales to grow this year, after a 14 percent year-on-year increase in February. Volkswagen’s Audi expects to grow faster than the four percent predicted for the global market, sales chief Peter Schwarzenbauer said.
Audi believes demand for luxury vehicles in China, where it is market leader, will continue to expand. China’s luxury market could more than double to 2.3 million cars by 2020 from 945,000 last year, according to Schwarzenbauer
Responding to the planned alliance between GM and Peugeot-Citroen, Ford CEO Alan Mulally said the company has no such ambitions. Ford Europe, which has said it could lose up to $600 million this year, wants to look for areas where it might share technology. Ford lost $27 million in Europe last year and lost $190 million in the fourth quarter.
Ampera COTY
There was some good news for GM Europe. The Opel-Vauxhall Ampera, Europe’s version of the Chevrolet Volt extended range electric vehicle, was named European Car of the Year in Geneva. The car may be impressive, but sales have been slow in the U.S.
Opel’s Stracke said GM Europe has already notched up 7,000 orders for the Ampera, and expects to reach its sales goal of 10,000 in 2012 with ease.
Stracke told the press conference at the show that the aim of GM Europe was what he called “sustainable profitability”. This looks like a tough assignment because investment bank Morgan Stanley said in a recent report that losses would top $1 billion in 2012, with losses of between $600 million and $700 million in 2013, 2014, and 2015.
If that happens, even the skills built up in the bad old days of GM’s bankruptcy might need some polishing.
Neil Winton – March 8, 2012
No comments yet.