Analysts predict that auto sales in Europe this year will get worse for all automakers.
“The present uncertainties will intensify this year, particularly in western Europe,” Christian Klingler, global sales chief for VW, said in an interview Monday at the North American International Auto Show. “The markets are challenging, and competition also is getting tougher.”
The fact that the German market managed to avoid as much as possible the European debt crisis, now the country confronts with a coming recession and weakening demand, fuelling analysts expectations that 2013 will be worse than 2012. Rising unemployment, austere national budgets and sovereign debt fears are affecting consumer demand, making it harder for automakers to keep their workers and deal with too much plant capacity.
“You must match production to demand,” GM CEO Dan Akerson said, echoing Ford CEO Alan Mulally’s mantra. “Right now there are too many … people making optimistic predictions on macro-economic growth.”
Unfortunately, European auto executives will not be able to take the drastic restructuring measures which helped the US industry during the global financial crisis, since they are suffocated by political and social pressure to keep jobs at all costs. Therefore automakers will continue to report losses in Europe, more than 5 billion euro annually, according to Fiat’s CEO Sergio Marchionne.
“No industry can continue to fund losses of that magnitude,” Marchionne said in a roundtable interview. “The gap is too large. The machine is broken. It just cannot go on forever.”