and Christian Wuestner
General Motors executives said Thursday that Europe’s car industry will remain unprofitable at current vehicle pricing levels, while Volkswagen AG said some competitors are at risk of going out of business without government aid.
Fiat SpA of Italy and PSA Peugeot Citroen of France are producing “very scary numbers” with discounts of as much as 30 percent off gross sale prices, said Susan Docherty, who runs European operations for GM’s Chevrolet unit, at the Paris Motor Show.
“Nobody can make money in Europe when you’ve got incentives at that level,” Docherty said.
Demand has plunged so much that deliveries continue to tumble, even with such large price cuts. Although discounting in Germany is at the highest in more than a year, according to industry publication Autohaus PulsSchlag, car sales across Europe could fall to a 17-year low, the region’s main auto trade group has predicted.
“It’s a bit of a despondent mood around here,” said Ian Fletcher, a London analyst at IHS Automotive, who was visiting the Paris show. “It’s not like the Frankfurt show a year ago. Certainly for the mainstream European brands, it seems like, ‘This is what we have for the future, but we haven’t really got anything to tackle at the moment.’ ”
Fiat, forecasting a loss of about $900 million in the region for 2012, isn’t introducing any new models at the Paris event, Europe’s biggest showcase for carmakers this year.
GM, owner of the Opel and Vauxhall brands in Europe, has racked up $16.8 billion in losses in the region since 1999. The business posted a first-half loss before interest and taxes of $617 million, and wrote down $590 million of goodwill. Competitor Ford is projecting a loss of more than $1 billion in Europe this year.
Peugeot, Europe’s biggest carmaker after VW, plans to cut jobs and close an auto plant, amid resistance from the French government, and has been selling assets to cut debt.
“It is unclear if all carmakers will survive without governmental help,” VW Chief Financial Officer Hans Dieter Poetsch told reporters Wednesday. “Especially carmakers in southern Europe that produce small cars will be affected.”
Fiat CEO Sergio Marchionne told reporters at the show that it isn’t seeking aid from its home government or the European Union.
Carlos Ghosn, head of France-based Renault SA, said at a separate press conference that he doesn’t foresee Europe-wide assistance being offered to auto manufacturers.
Daimler AG of Germany, the world’s third-largest luxury-vehicle maker, said Sept. 20 that its car division’s earnings will drop in 2012 as the European market contraction hurts second-half business.