Arab Today, arab today european auto execs warn of 2012 slowdown
Last Updated : GMT 08:53:10
Arab Today, arab today
Arab Today, arab today

European Auto execs warn of 2012 slowdown

Arab Today, arab today

Arab Today, arab today European Auto execs warn of 2012 slowdown

Beijing - Arabstoday

Europe’s car industry will struggle to grow in 2012 as a worsening credit crisis prompts consumers to rein in spending, with Fiat SpA (F) saying it may delay the introduction of new models as a result of a global slowdown.Ford Motor Co. (F) expects industrywide sales in Europe to be little changed at between 14.7 million to 15.3 million units next year, Europe head Stephen Odell said at the International Motor Show in Frankfurt yesterday. Fiat Chief Executive Officer Sergio Marchionne said 2012 will be “difficult” and Volkswagen AG (VOW) said growth next year won’t be as strong as it had predicted.“Europe is facing a period of weak growth or even recession,” PSA Peugeot Citroen CEO Philippe Varin said at a briefing at the show. The French carmaker, also reliant on Europe for most of its sales, will eliminate jobs and review the future of its Aulnay plant in 2014 because of a “competitiveness problem” with French small-car manufacturing, he said.The Stoxx 600 Automobiles & Parts Index has slumped 27 percent this year after advancing 45 percent in 2010. Shares in Fiat, which relies on southern Europe for much of its revenue, have lost 46 percent. Peugeot, Europe’s second-biggest carmaker after VW, now has a market value of 3.9 billion euros ($5.3 billion) after falling 41 percent this year, compared with annual revenue of 56 billion euros.European services and manufacturing growth weakened in August on tougher austerity measures and waning global demand. Economic confidence plunged last month after the region’s recovery lost momentum in the second quarter.“The Italian market hasn’t been so weak since the 1980s,” Marchionne, who is also CEO of Chrysler Group LLC, told reporters at the show. Fiat may delay the introduction of new models globally and won’t consider selling shares in its Ferrari SpA unit in such a market, he said. Plans to buy the remaining stake in Chrysler are also on hold, he said.Global auto sales should rise 4.1 percent to 53.9 million cars in 2011, and may continue growing to 57.9 million units in 2012, according to research firm IHS Automotive. The forecasted gains are smaller than was expected a couple weeks ago, said Ian Fletcher, a London-based IHS analyst.Most of that growth may come from luxury cars. Executives from Daimler AG (DAI), Bayerische Motoren Werke AG (BMW) and VW’s Audi unit say their factories are still running at full tilt. Audi yesterday raised its full-year sales forecast to 1.3 million vehicles from 1.2 million previously.“For 2012, we see a higher likelihood of a slowdown of growth rather than a recession,” Daimler CEO Dieter Zetsche said to reporters at the Frankfurt motor show. “Our order intake has been unaffected, which means a continuation of very strong demand for passenger cars and commercial vehicles.”Ferrari expects record sales of 7,000 cars this year, with Greater China becoming its second-biggest market. BMW’s Rolls- Royce Motor Cars hasn’t experienced a slowdown and is “bullish” on sales prospects, CEO Torsten Mueller-Oetvoes said in an interview with Bloomberg Television.Even as current business appears insulated from the economic risks, BMW is equipped for a slowdown after trimming costs and reducing its leasing business to lower financial risk during the 2009 recession, Chief Financial Officer Friedrich Eichiner said, adding that BMW could withstand a similar crisis without its automotive business slipping to a loss.“Right now we have no indication of a decline in the market, but if it comes we are more prepared than in 2008, with respect to our financial strength and flexibility in our plants,” Volvo Cars CEO Stefan Jacoby said.Volvo, which employs about 20,000 people globally, has a bigger share of temporary workers today than in 2008, allowing it to respond faster to a potential slowdown, he said.“The global automakers are in a much stronger position balance-sheet wise versus the beginning of the crisis in 2008, so the risk of immense cash-burn and state bailouts is no longer a near-term risk,” David Arnold, a London-based Credit Suisse analyst, said in a phone interview. “Emerging markets, which have been the savior to this sector the last three years, especially on the premium side, are the big X factor.”

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