Who would want to be a carmaker these days?
You don’t even get the endless golf, private jets and unlimited expense accounts that once were a feature at least in the corporate world of Auto America.
Although GM and Chrysler have been shamed by going cap-in-hand to the taxpayer, Ford at least has been able to hold its head up as surviving without recourse for support and for that, they deserve due credit; the firm has proved swift of foot and not afraid to take drastic measures to survive.
Arguably Ford have led the global design ethos, at least among Western car producers, and have generally kept their range fresh. All the more surprising then that Ford’s sales have plummeted in Europe, down 29 percent in August for a market that has dropped 9 percent from a year ago to just 8.27 million units.
The collapse in sales and price war that has followed has plunged Ford into a loss estimated to hit $1 billion this year. To be fair, Ford is not alone — most of the mass market carmakers have lost sales, but Volkswagen has bucked the trend, as have Hyundai and Kia of Korea (up 3 percent) and the UK’s Jaguar Land Rover (up 48 percent) as the Indian-owned JLR success story rolls on, refreshed continually it seems with new models and improved quality.
Everyone agrees the European car industry is suffering from an excess of capacity, a situation that is made much worse by the debt crisis weighing on new car purchases, particularly among southern states.
Nevertheless, Fiat’s Sergio Marchionne is coming under political pressure to spend money investing in Italian car plants, even as sales have collapsed to levels last seen in the early 1960s, according to an FT article.
Understandably his response was blunt.
Continued in Part Two.