Today at the Geneva Auto Show, Renault CEO Carlos Ghosn said that the auto market in Europe will remain tough for the following five years, therefore automakers need to push into other markets.
As automakers in Europe have to deal with fleeing customers, idle production lines and struggling economies, their only chance to recover and survive would be to push into other markets. The rigid labor agreements make building cars in Europe more expensive than in other markets and also make it difficult to transfer jobs elsewhere.
Ghosn said that he tries to make the French automaker’s plants in the home market more competitive by trying to seal a deal with its labor unions on labor practices and staffing. The European financial crisis has hit automakers hard, sending unemployment to unseen high levels and to a drop in overall retail sales in the region. Last year auto sales in the EU fell 7.8%, marking the fifth year of declines.
“What we don’t want is for it to become catastrophic. As long as the decline is 2-3 percent or at best stable for the next five years, we can manage. The only way to prepare for that is to make sure you have strong growth and profitable growth in other markets,” said Carlos Ghosn.