Automakers warned that Europe's car market may not improve for the next two years as austerity measures and high unemployment keep drivers away from showrooms. Companies at the Paris Auto Show, which opened to the media on Thursday, showed off no-frills cars they hope will lure cost-conscious drivers alongside premium models to tempt buyers in China, where sales growth is still robust, but slowing.
Even manufacturers that had until recently been thriving, poaching market share from ailing competitors, are feeling the pinch. Volkswagen AG sales chief Christian Klingler told reporters at the show there would likely be no significant rebound in the European market over the next two years.
"We're bracing for more negative surprises in 2013, perhaps also in 2014," Klingler said. VW Chief Executive Martin Winterkorn had told reporters on the eve of the show that 2013 would be "a very challenging year, especially in Europe." The biggest challenges would be southern European markets, he said. Volkswagen, Europe's largest automaker, warned earlier in the week that business conditions had become "significantly more difficult."
PSA Peugeot Citroen CEO Philippe Varin told reporters he did not see a recovery in the European market next year as he warned that the previously robust German market was starting to weaken too. His prediction chimes with those of other carmakers hoping for a recovery in Europe in 2014 or 2015. Mass-market automakers, facing the biggest pressure - being squeezed by low-cost brands on the one hand and premium marques on the other - are hoping their own forays, both upmarket and downmarket, will pay off.
Renault's Romanian affiliate Dacia is showing all-new versions of the Logan and Sandero models that have been an unexpected hit in Europe. Peugeot's domestic rival Renault SA had on Wednesday slashed its market forecasts and said its full-year vehicle sales goal was under pressure, while Peugeot, which in July announced a factory closure and 8,000 job cuts, predicted rivals would soon have to follow suit.
Renault's Chief Operating Officer Carlos Tavares said the group will ask unions for a new nation-wide deal on pay and conditions to avert plant closures and mass layoffs of the kind announced by Peugeot. Fiat SpA Chief Executive Sergio Marchionne, also president of European industry association ACEA, used the show to renew his call for a Europe-wide approach to the problem of excess production capacity that is piling pressure on carmakers' profitability as sales stagnate.
"We have a collective responsibility in the industry to carry out a progressive restructuring at European level," Marchionne told a news conference. Paris is a quiet show for Fiat, which has delayed investments in the volume sector pending a market recovery. Buyers will have to wait until the Detroit auto show in January 2013 to see new models from high-end Maserati, including its SUV, and the Alfa Romeo 4C sports car.
Elsewhere Alfred Rieck, sales chief of Opel, which is showing its new Adam mini car in Paris, told Reuters at the show he expected the General Motors Co unit to sell more than 1 million vehicles this year. However, Opel also sees dark clouds ahead. "I am not being a pessimist when I say that we are not expecting any tailwinds from the market next year," Rieck said.
Rieck highlighted the fierce price competition automakers face in Europe, saying he could not forecast Opel's market share because he could not predict competitors' pricing. South Korean automaker Hyundai Motor Co said on Wednesday it was deferring its sales and market share target by at least a year due to the dismal outlook.
Japan's Toyota Motor Corp sounded an equally cautious note: "My personal opinion is, at least for the next two to three years, I don't believe that we will have a strong recovery," its Europe CEO Didier Leroy said on Wednesday. Prospects for China's auto market - the world's largest - are also in focus at the show, which opens to the public on Saturday. After boosting the earnings of premium carmakers such as Daimler AG, Audi and BMW, Chinese growth is beginning to slow. But carmakers facing slumping markets in Europe have little choice but to pin their hopes further afield, even if the breakneck growth they have enjoyed in recent years has eased.
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