Car sales in Europe are expected to fall 4 percent to 13 million vehicles in 2012 from 2011’s estimated 13.5 million, according to a forecast from PricewaterhouseCoopers.
This would mark the fifth consecutive decline from the peak of 16 million cars recorded in 2007. The European economy will shrink 1.2 percent in 2012, Citigroup predicts, while the OECD warns that the region poses serious downside risks to global growth. Carmakers that are heavily reliant on the European market, such as PSA Peugeot Citroen, Renault and Fiat will suffer most.
73 percent of Peugeot’s revenue was generated by Western Europe last year, while Renault earned 70 percent of its sales on the continent. Fiat’s reliance on European markets is smaller, at 54 percent, but still heavy, according to Bloomberg.
“Peugeot and Fiat are probably most at risk. They’re just too exposed to European markets, they don’t have the strongest product momentum, and their balance sheets are already stretched,” Arndt Ellinghorst, an analyst with Credit Suisse, was quoted as saying by Bloomberg.
PSA’s European sales fell 13 percent last month, with the company expected to lose more in the second half of the year than what it earned in the first half when it posted an operating profit of €405 million. PSA could lose as many as 6,800 jobs.