Renault CEO Ghosn Says Europe Has to End Austerity Measures to Boost Demand image

Renault CEO Carlos Ghosn says that Europe has to end austerity measures to stimulate demand as the auto market will fall for the sixth straight year in 2013.

“There is no debate that at some point, there will be need for economic policies to stimulate Europe,” Chief Executive Officer Carlos Ghosn said at news conference in Cascais, in the outskirts of Lisbon. “But I’m not expecting it in the medium term, over the next three years.”

For the first time in 2013, the euro area economy will drop in back-to-back years, which will lead unemployment to higher levels as consumers will curb spending even more, according to the European Commission. Analysts predict that this year gross domestic product in Europe will fall 0.3%, compared with the previous forecast of 0.1% growth made in November.

Fiat’s CEO Sergio Marchionne came with the same solution as Ghosn, as Fiat and Renault have seen sales drop more than the average in 2012 in Europe, as both automakers are more exposed to markets on this region, such as Italy and Spain, where government have already applied severe cuts, which resulted in a drop in demand for new vehicles.

’’You need to anticipate demand when you need it,’’ Ghosn said. “Look at what central banks are doing today; they’re swamping markets with liquidity. But these liquidities, they will take them back later on. That’s how you deal with crises.”