Present condition of Automobile Sector in Europe & USA
Presented By Raja Mohan.J Mani Kandan S Samuel Dhinagaran Wilson Saravanan Madhavan Karthik Raj Santhosh K
Present condition of us automotive industry
The global automotive industry is facing a crisis unlike anything ever seen. • Overall annual sales in the United States, based on numbers reported for February 2009, are forecast to fall below 10 million units for the first time in 27 years. This is more than a 30 percent drop in overall sales compared to the previous year. • If sales within the U.S. drop to an annualized number of under 9 million units, it would represent the first time ever that China would surpass the United States in terms of monthly sales.
for February 2008. Ford down 40. and Nissan down 54 percent. • The numbers will probably get worse before they get better. compared to a year earlier. All manufacturers.1 percent. are being impacted on a global basis.
•The impact of the current economy and the current state of the automotive industry is not limited to the Big Three.5 percent.•automotive sales for 2008 fell at the fastest rate of the past 34 years.
.9 percent.2 percent. The industry that has long been considered the king-pin of all manufacturing has been brought to its knees and is struggling to get up. foreign and domestic. GM was down 48. Honda down 33. Toyota down 39.
Causes of fall of us automotive market
Automotive industry crisis of 2008–2010
The automotive industry crisis of 2008–2010 was a part of a global financial downturn. The crisis affected European and Asian automobile manufacturers. The downturn also affected Canada by virtue of the Automotive Products Trade Agreement.
. but it was primarily felt in the American
automobile manufacturing industry.
•By 2008. Ford.
. • The popularity and relatively high profit margins of these vehicles had encouraged the American "Big Three" automakers. General Motors. sales began to slide. and Chrysler to make them their primary focus. With fewer fuelefficient models to offer to consumers. the situation had turned critical as the credit crunch placed pressure on the prices of raw materials.The automotive industry was weakened by a substantial increase in the prices of automotive fuels linked to the 2003-2008 energy crisis which discouraged purchases of sport utility vehicles (SUVs) and pickup trucks which have low fuel economy.
North American consumers turned to smaller. cheaper. and elsewhere have implemented creative marketing strategies to entice reluctant consumers as most experienced double-digit percentage declines in sales. • The Big Three faced criticism for their lineups." foreign cars manufactured or assembled in the United States. more fuel-efficient imports from Japan and Europe. Major manufacturers. which were seen to be irresponsible in light of rising fuel prices.
. •However. Europe. at lower cost than true imports. including the Big Three and Toyota offered substantial discounts across their lineups. many of the vehicles perceived to be foreign were actually "transplants.• Car companies from Asia. North America.
In motor vehicle and parts manufacturing jobs are not the only jobs impacted. The Bureau of Labor Statistics reported that in January 2008. Two hundred thousand jobs at a weighted average of $25 per hour working for a full year represent $10.as staggering as they are . then the loss of 197.
But even these numbers .
.4 billion in payroll.100 jobs in just 12 months.. the sales and distribution arms of
the industry and the after market. Most analysts agree that the number of indirect and/or induced jobs ranges between three and six for every direct job created within the industry.e.100. has been unsurpassed.Automotive Employment Statistics
The loss of jobs in the U.do not tell the whole story. One of the reasons the industry has long been held to be the crown jewel of all prospects in economic development is the multiplier effect of direct employment.S. or over 20 percent. 951. Employment for January 2009
was reported at 754. a loss of 197.200 persons were employed in motor vehicles and parts manufacturing. i. If the inverse of this relationship is true. The BLS also reported the loss of an additional 170.000 jobs among vehicle and parts dealers.100 jobs is even more staggering.
automotive dealerships and consumers– not to mention its impact on the economic conditions of states.
. automotive suppliers. and many are reluctant to buy new cars when their own job may be in jeopardy.
The current state of the automotive industry has had a catastrophic impact on industry employees.The automotive industry has become nearly stagnant in one of the shortest periods of time in history.
An anomaly is that used cars are actually increasing in value compared to new cars which are decreasing in value. counties and communities. Consumers are holding on to their current vehicles for more than a year longer than in recent years.
once profitability recovers. But in the end. Revenue growth.
. and will probably not reach double digit growth for many years. such as Oldsmobile for General Motors. the strong will prevail. will disappear. There will undoubtedly be winners and losers. Growth of the industry will be much slower. and the industry will emerge with new dominant leaders.The total impact and the eventual outcomes are yet to be determined. and probably a lot more flexible than in the past. leaner. The industry will be smaller. Some of the name brand vehicles consumers have known for the past 30 or more years. is more likely to be in single digits for the near term. But those that survive will be much better in quality and serviceability than any vehicles in the past.
The European automotive industry
The European automotive industry has integrated operations and a worldwide network of joint ventures.
. Russia. Turkey. Switzerland. production and assembly sites
■EU automotives exports in 2010: €132 billion ■EU automotive imports in 2010: €47 billion ■EU share of global automobile production: 25% ■Biggest markets for EU automotive exports: USA. China.
as the EU imports about four times as many cars as it exports.
. etc. with integrated automobile operations that combine research. production and assembly sites. EU exports of motor cars reached € 76 billion in 2010. The main five regions vis-à-vis which the EU has a surplus are the NAFTA and EFTA countries. components. production and sales. trucks. with a 58% increase over 2009. India and Turkey. development. It has a dense worldwide network of joint ventures. While Japan is the sixth largest destination of EU motor cars exports.) represent about 10% of the value of total EU exports. design. Other trading partners vis-à-vis which the EU trade balance reveals a significant deficit are South Korea.The European Automotive Industry is a leader in the global automotive market. Total automotive exports (including also buses. EU’s biggest car trade deficit originates in this country. China. the Russian Federation and the Middle East.
was hardly hit by the global crisis. The industry. Conversely.EMPLOYMENT STATISTICS
In Europe the automotive sector directly employs over 2 million people.3 million units registered). which is active in many EU Member States and operates a dense network of supplier industries. in particular for export markets. The health of the sector affects roughly 8% of the EU's active workforce. and indirectly supports about 10 million jobs in other industries. the economic recovery improved the general market situation. the EU market for new passenger cars declined by 5. due to the ending of government fleet renewal schemes in many EU countries
Since 2010.5% that year (13.
The EU seeks to do this by negotiating the removal of barriers to automotive exports both multilaterally in the WTO and bilaterally with our major trade partners. and South American markets.
Although high tariff barriers still seriously hamper market access for EU exporters in Asia and India.
. This type of trade barriers are the focus of the European Commission in improving trading conditions for the EU automotive sector. additional testing requirements for EU exports. excise and luxury taxes that add on to the sales price of EU vehicles. it is often non-tariff barriers 'behind the border' that effectively ban EU vehicle exports to the South East Asian. Local content requirements and tax incentives for local producers are also applied to the disadvantage of EU exporters. Strict rules for joint ventures or majority owned foreign companies also hamper the activities of European companies. Chinese.Fostering European automotive exports and investment through improved market access is an EU trade priority. These barriers can include burdensome and discriminatory certification requirements.
wages. But in Europe. working conditions and wages. working conditions and relations of forces with workers continue to be decisive issues for the employers. North America and Japan has for now passed.
. or one tenth of all European manufacturing industry.
The aggression of job losses should not hide the fact that the European car industry employs in its factories and design offices three and a half million workers.Condition in Europe
The recession which in 2008-2009 led to historic lows in car production in Europe. in particular for the employees. Most world car groups saw a return to profit in 2010 at the price of blows against employment. the factors at the origin of the recession are still present and the current return to profit does not mean exit from the crisis. The facts and data are stubborn: the car industry in Europe is not a sector on the path to extinction. Levels of employment.
the employers wish to make the car industry the example for reactionary counter reforms. This concentration favoured the creation of relationships of force which made the sector the advanced element of workers struggles. After the old European imperialist countries it was Spain and Portugal which would constitute new areas of implantation in the 1970s. but in the opposite direction. And in the 1990s. resting on the fear of unemployment to reverse the gains and collective agreements won by employees in previous decades. France. Italy and Britain. factories with tens of thousands of workers existed in Germany. under the pretext of crisis.The industrial implantations of the European car industry have been geographically extending for fifty years.
In the 1960s and 1970s.
The social confrontation continues. it was the turn of the countries of Central and Eastern Europe to be sites for the construction of new factories.
the same modes of exploitation of workers. this time by Fiat-Chrysler CEO Sergio . is being bandied about... It was a dire warning and a cry for help. spoke for all EU automakers. All-time-high gas prices are part of the reason.
"Horrible" was how he described the plight of the auto industry when he spoke at the European Business Conference in Bruges. He didn’t see a recovery before 2014. the fifth down year in a row. And the R-word—restructuring—unpalatable and almost illegal as it is in Europe. He predicted that auto sales would sag by 5% in 2012. Belgium. with their traditional and new forms in the context of the crisis which continues to sap all the capitalist economies. It is necessary to examine the current conditions of exploitation of the workers. and the same firms selling the same products. The $10-Per-Gallon Gas Has Arrived In Paris
.. on March 20. Thee concrete experiences in the different European counties and different firms should be shared so as to begin to construct common and coordinated responses. Europe with its relatively affluent population of 500 million has turned into a nightmare for the auto industry. who. read. as President of the European Automobile Manufacturers' Association. and for how it sends French consumers and presidential candidates reeling.The recession of 2008-2009 is not a simple “accident” after which the car industry would resume the same course with the same sites of production and sales zones. For that debacle.
2% from the already traumatized level last year. shutter ten or so plants.827 new vehicles were sold in February.3%. And in Greece. Portugal swooned 47. Marchionne’s cry for help wasn’t just about saving Fiat whose EU sales dropped 16. and Rumania 54%—but among the largest markets.New car registrations in February fell 9. or 3 million units.8%.8% respectively. and massively lay off workers. Number two France and number three Italy plunged 20. For January and February.7% so far this year. where hardly anything is sold anymore. The results would have been even worse had it not been for an extra selling day.9%. It was the fifth down month in a row. Some bright spots were tucked away at the fringes of the EU—Estonia was up 21.
. down 45.2%. But that is precisely what you can’t do in the EU. only 3. Among smaller markets. The whole industry would have to cut capacity by 20%.7% across the EU compared to last year. only Germany scraped by with a decline of 0. Hungary 31.2%. registrations were down 8.5% and 17. worse even than February 2009 at the trough of the financial crisis.
But layoffs and plant closings become highly politicized. re-announced at the Geneva auto show that it would solve its overcapacity over the next two years.
.8%.800 workers. whose February sales plunged 16. and that plant closings weren’t part of the alliance. In November. Layoffs will be even tougher to implement if socialist François Hollande wins the election.PSA Peugeot Citroën. which would focus on saving money elsewhere. The deal fell apart. Whatever their thinking was at the time. GM and PSA are now saying that Opel and PSA would each deal with its own overcapacity. French Labor Minister Xavier Bertrand issued a stern warning to PSA CEO Philippe Varin when word of talks with GM leaked out: layoffs as part of the alliance would be out of the question. President Nicolas Sarkozy summoned Varin and told him to reconsider laying off 6. Chancellor Angela Merkel got personally involved in protecting Opel factories during the financial crisis and brokered the sale of Opel to keep GM from shutting it down. but the restructuring agreement survived and prevents GM from closing any plants until 2014.
. the Number One Foreign Investor in Germany. Clearly.” Alas. but there are those that can get through it and those that can’t. China. And those that can’t—Fiat. Marchionne said and added that the French government bailed out its automakers on condition that they wouldn’t close any factories. PSA. VW. and the fretting around it. Renault. read. the opposite happened: the government pushed GM and Chrysler to restructure during their bankruptcies as part of the bailout. whereas in the US. Even in Europe they weren’t faring too badly. and Ford—will have to restructure. The most recent deal was Kiekert. and Daimler are basking in last year's record worldwide sales and profits. he said. the world's largest manufacturer of automotive door-lock systems: a Chinese government-owned company bought it... So he appealed directly to the EU Commission to liberalize labor markets because individual countries wouldn’t do it.. A sea change in the German auto industry. with Daimler up so far this year and VW and BMW down a smidgen. the situation is “horrible” for European automakers.Individual countries prevent layoffs. or get bailed out again.
Overcapacity pushes prices down. For that inexorable and stunning process. and “that’s why almost no one is making money in Europe. BMW.. Restructuring is already happening in Germany.
that some automotive companies are not going to survive– at least not in their current size and configuration. Consumer confidence has been stymied. if not impossible. It is unfortunate.
There will be additional significant changes within
. Credit financing for both consumers and manufacturers has been tightened. Small to medium sized parts suppliers are finding it difficult. but most likely. many of which are predicted above. the automotive industry over the next several months. to stay in business.conclusion
Dramatic changes in the global economy have driven
the automotive industry to the brink of disaster.