Fitch forecasts slight global growth for European automakers image

According to Fitch Ratings, the carmakers that have European roots – including the second-largest global automaker Volkswagen AG – will benefit from a modest rise in worldwide new-car deliveries.

Together with the savings coming from lowering cost expenses and the slight global increase in sales, the credit ratings of the European automakers’ will get a modest boost. The credit ratings agency says the regional registrations in Europe should climb by 4.5 percent to 5 percent in 2014 and could be further lifted by 3 to 4% in 2015. Fitch added that the European recovery – which hit a two-decade low after a six-year slump in demand – is still frail and the sales growth would be very uneven across the continent.

According to the report, “a lack of clear and sustained economic recovery continues to hinder demand for new vehicles in Europe,” but fortunately the European automakers are hard at work implementing restructuring strategies and cost cutting programs. The strategies, implemented in the past two to three years are finally paying off and have allowed for a larger overall profitability margin. In the near future, these measures should ensure the growing competition, continued pricing pressure across the globe and overcapacity in Europe are more easily offset.

Via Automotive News Europe