Auto Industry in Europe Braces for Shake-out as Market Dips in 2012
BROMSGROVE, England, March 20, 2012 /PRNewswire/ --
The European auto industry is facing a shake-out as the European car market declines and attention turns to production overcapacity, according to just-auto editor Dave Leggett.
"Estimates suggest that overcapacity in the region is around 20% and that could amount to as many as ten plants or 3m units of unneeded vehicle manufacturing capacity," says Leggett. "It is looking like an adjustment to bring manufacturing capacity more into line with real market demand is unavoidable as pressures on profitability mount."
As the market declines in 2012 - and it is still well under pre-2008 levels - the pressures on Europe's volume carmakers will inevitably grow, according to industry analysts. The recently announced alliance between General Motors and PSA Peugeot Citroën is a sign of how the financial pressures are building and how serious they are.
"Adjusting model-mix and looking at shift patterns or variable costs can only take you so far and is a typical reaction to cyclical fluctuations in demand," adds Leggett. "But given the significant step-down to the West European car market since 2007 and the limited prospects for demand recovery, carmakers will likely conclude, however reluctantly, that they have to take some fixed capacity out altogether to remove expensive overhead. But where could the axe eventually fall? That's the big question."
Data issued by LMC Automotive showws that the West European car market LMC Automotive shows that the West European car market declined by 11.4% in February and the automotive forecasting firm projects that the West European car market will fall by 6.1% to just over 12m units in 2012.
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About just-auto.com
Established in 1999, just-auto is a leading online resource for the global automotive industry, publishing around 50 news articles, analysis features and insights every working day. Under the direction of Managing Editor David Leggett, its experienced team of journalists, consultants and analysts provide a unique blend of automotive news, interviews and research that is delivered to over 90,000 business executives per month.
Via its website, webinars and QUBE, CONSULT and PLDB research platforms, just-auto offers insight into OEM and supplier corporate strategies, manufacturing developments, in-depth management briefings, supplier technologies and innovations, component market trends and forecasts and current/future car model programmes.
For details of how just-auto is "helping decision makers make decisions" visit http://www.just-auto.com.
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