As weak European demand continues and profits from previously fast-growing emerging markets slid, the US car buyers came to the rescue of the world’s automotive industry in the third quarter.
A recovering economy, rising consumer confidence and a healthy dose of low interest rates insured a rev up in US car sales, ramping up productivity and profits at American car factories and providing much-needed relief from mounting losses in Europe and stuttering growth elsewhere.
As GM’s global business limps, Chrysler’s European parent Fiat issued a profit warning, and Volkswagen reported falling sales in emerging markets outside of China, Chrysler and General Motors both reported strong profit growth from their US operations.
“North America has certainly been a big help in terms of profitability and margins for the industry,” said Stuart Pearson, automotive analyst at Exane BNP Paribas in London. “Europe continues to be a drag, despite some improvements, and at the same time the emerging markets, mainly due to currency, have gone from being a help to a hindrance, at least in the short term.”
Chrysler, the US’s third-largest carmaker by sales, saw profits rise 22 %, which helped mask the bulk of losses sustained by parent Fiat, but not enough to save the Italian carmaker from cutting its full-year profit forecast by as much as 16 %.
“My own personal conviction is that we will not see a restoration of a healthy [European] market going forward either in 2013 or 2014,” said Mr Marchionne, Fiat’s chief executive. “We are looking at a flat line or at best a very marginal improvement.”
GM posted a 15 % rise in earnings but its business division covering Asia-Pacific, China and Eastern Europe saw earnings fall $500m during the quarter – the same amount that earnings from North America rose.
Volkswagen, for whom the US is still a relatively small portion of total sales, has fared less well there in recent months because of a small and ageing model line-up.
Via Financial Times