GKN expects another sluggish year for the European auto market, adding that the company will rely on Asia and the US for growth this year.
British car and plane parts maker GKN beat analysts’ forecasts after reporting today, February 26th, a 19% increase in 2012 pretax profit, due to increased demand for luxury vehicles from automakers such as Audi and Jaguar Land Rover in China.
“I don’t see the European small car market recovering this year, the best we can expect is flat sales,” Chief Executive Nigel Stein told reporters. “But the U.S. and Asia should continue to grow and more than offset softness in Europe.”
New car sales have dropped in Europe as governments apply austerity measures to reduce their debts. In contrast, US and Asian markets have managed to bounce back really fast from the global financial crisis. In 2012 auto sales in the US have increased 13.4%, the highest level since 2007, while sales in Europe have dropped to a 17-year low. Analysts predict sales in the US this year will go up 4.9%, while Europe will fall 1.7%.
“In 2013, GKN will have to take the rough with the smooth. We envisage most of the rough in the first half and the smoother part in the second half,” said Jefferies analyst Sandy Morris.