VW and BWM Expect ‘Difficult’ 2013 Due to China Slowdown and Europe Slump image

VW and BMW said they expect a ‘difficult’ 2013 as the European auto market and vehicle prices will continue to drop and growth in China already began to slow.

According to CEO Martin Winterkorn, Volkswagen, which is Europe’s biggest automaker, is delaing with “tougher competition and difficult economic conditions,” while BMW’s CEO Norbert Reithofer, said that the company, which is the largest luxury automaker in the world, sees this year as “likely to remain challenging in many markets.”

Auto sales in Europe dropped in 2012 to a 17-year low and in January sales reached the lowest level since 1990, according to industry association ACEA. BWM and VW relied on the US and Chinese growth to make up for the loss in their home region. BMW said yesterday, March 14th, that profitability for its automaking unit dropped last year and analysts predict that earnings will also drop in 2013.

“Europe is not the only market where conditions are deteriorating,” said Stefan Bratzel, director of the Center of Automotive Management, Germany. “Growth in China declined to a one-digit percentage rate last year, and the U.S. market will probably level off in 2013. At the same time, costs to expand sales and services organizations are rising.”