We are used to hearing of a two-speed world, particularly in the metals industry.
Growth in China and other emerging markets is frequently a factor of 5 or 10 higher than in the West, if growth in the West is achieved at all. But a number of factors are currently conspiring in the automotive world to depress sales pretty much everywhere.
Global light vehicle production in the first quarter of 2013 declined 1% year-on-year to 20.8 million vehicles, with increased demand in China and Brazil failing to offset contractions in Japan, Europe and India, which were down 16%, 9% and 6%, respectively, according to the Financial Times.
Leading the contraction in volume terms was – not surprisingly – Europe, where the light vehicle sector’s sales fell 17% in spite of hefty price incentives being offered by manufacturers. According to the BBC, average retail sales incentives in the top five markets – Germany, the UK, France, Italy and Spain – had risen 13% to almost 2,400 Euros ($3,200) per vehicle.
Nevertheless, last month only 1.31 million cars were registered in Europe, 10.3% lower year-on-year and the 18th consecutive month of falls.
Peugeot and Toyota were the most-affected manufacturers, with sales falling more than 16% from a year earlier. Volkswagen also suffered a sharp drop, with sales down 15%, and General Motors Opel saw sales fall by 12.8%. Opel has been loss-making for 10 years in Europe, and GM took the decision recently to close the first car plant in Germany for decades when theyannounced the closure of Bochum next year, while simultaneously investing in other plants to try and turn the division around.
Hand in hand with the carmakers is the supply chain. While sales increased at GKN, the world’s largest maker of steering joints by sales, margins contracted 0.7% to 7.4% and contributed to a fall in pre-tax profits.
The fortunes of Europe’s carmakers in the premium and luxury markets have generally been buoyed by emerging market economies – but not anymore.
by Stuart Burns