A Great Show for a Market in Crisis

2012 Geneva Motor Show

The Geneva Motor Show might have concealed the European auto industry’s woes, but it couldn’t banish them.

The Geneva Motor Show, the most glamorous of the European car shows, was shrouded this year with feelings of indecision and insecurity. Four years ago at Geneva, the Lehman Brothers LLC collapse reverberated around the world financial markets and the recession was just begging to bite worldwide. This time around, nobody is sure of how the European sovereign debt crisis is going to be resolved. According to forecasts the only certainty is that the European cars market will continue its free fall this year.

And during the first press day, when sales statistics from last month were still fresh in their memories, industry leaders had all the reasons to be gloomy. The three main victims of the free fall are the three biggest Southern European manufacturers i.e. Fiat, Peugeot-Citroen and Renault. Overall new cars registration in February was down 7 percent in the EU and EFTA. Renault Group sales collapsed by 25% (Renault brand sales were down 29%); Fiat Group sales fell by 16%. General Motors, whose boss Dan Ackerman predicted that its European arm will keep on losing money for the next two years, saw it sales falling by 14% and Ford sales declined by just 4%.

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The three premium German automakers experienced mixed fortunes. Audi's Sales grew by 11%, Daimler's sales grew more moderately 5% and BMW suffered a 5% decline. Among the Asian car manufacturers Hyundai and Kia of South Korea maintained their rapid growth pace while Toyota lost 8% in sales. Registrations in Germany, Europe's largest auto market, were flat, while in France sales dropped by 21% and Italy sales slumped 17%. "Carmakers too dependent on small cars and their national markets, such as the French and Fiat, are suffering the most," said Ian Fletcher, a London-based analyst with IHS Automotive to Bloomberg.com.

"They are basically trying to keep their heads out of the water." Earlier in the week in an interview with Detnews.com, Fiat CEO Sergio Marchionne, said the he considers moving Fiat Group headquarters from Turin to Auburn Hills. A few weeks ago Marchionne said that Europe mass car market is economically unproductive and therefore, on pure economic analysis, does not deserve capital allocation.

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