European car makers have painted a murky portrait of the global auto market this Wednesday as concerns about Latin America and Russian decreased the hopes of a steady rebound in the European auto demand.
PSA Peugeot Citroen, Europe’s second-largest automaker, stated that they went into the black for the first time in 3 years with the help of cost cuts and a healthy interest spotted in the new models launched.
Fiat reported a steep decline in second-quarter profit but its revenue went up due to its luxury brands, Jeep and Ram pick-up trucks and also due to increases in North America and China. A decline in operating results still leaves the company in a struggle to achieve profitable growth.
Because of the political tensions over Ukraine, Peugeot expects the Russian car market to fall 10% this year from 2.8 million sales in 2013, a view closely shared by Renault.
GM and Ford Motor also stated their recent concerns about Russia. Ford took a $329 million equity impairment charge for its joint-venture business in Russia, while General Motors cut its Russian production by about 20% on the basis of lazy demand.
Fiat’s results were definitely affected by the weakness in the Latin American markets where the economy is slow and the exchange rates are unfavorable but also by the sales in Brazil, where Fiat is the biggest auto maker. There, the demand of cars fell after the government incentives stopped. Fiat stated China remained a good profit source, with a 59% sales gain in luxury brands like Ferrari and Maserati.
The not so good news about Russia and South America arrive at a time when the car market in Europe registered a fourth consecutive quarter of growth until June 30, having shown signs of stability.
Peugeot has managed to make progress in the meantime, raising its European sales to 12% by rising sales and making capacity cuts, which included closing a large factory near Paris. It posted a €114 million net loss for the first half of the year, improving from a €471 million a year before. Fiat also improved in the loss department, dropping from €69 a year ago, to €6 million, this second quarter.
Chrysler also stated that profits slid 18% in North America because of expenses on advertising sales discounts and an unfavorable exchange rate.
By Gabriela Florea