Europe: decline replaced by stagnation image

As auto industry leaders converge on Geneva for the annual auto show there, some measure of optimism is in order, as the Western Europe market slowly recovers from the six years huge decline.

Experts and analysts all share the opinion that finally the worse is – really – over, with a sales outlook for 2014 at a 2 to 3 points growth. That means the decline has stopped – as the sales grow from a very low basis – before the onset of the global financial crisis more than 2 million units sales above today’s level were common each year.

And all the players involved know those days would not come back very soon – Europe is a whole different case than US – where swift and decisive action from the government saw General Motors and Chrysler enter bankruptcy and emerge clean – with sales now picking up pace. Still, tough decisions were made there, as plants were closed and jobs lost – all in order to address the problem of plant overcapacity.

“There’s not much compelling evidence that demand is really recovering,” says Bernstein Research analyst Max Warburton. “The data suggests many markets are near a trough and contain some encouraging signs to support the view that demand can recover. We are currently forecasting only a minor improvement in car sales in 2014 of three per cent. But the evidence is building that this may prove too conservative.”

Except for UK and Germany, the other European countries still face big threats – with chronic overcapacity crippling PSA and Fiat in France and Italy. And the French government share takeover in the PSA Peugeot Citroen certainly doesn’t help, while the Italian government worries and coerces Fiat not to cut jobs in its home market.

Via Forbes