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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.

are being impacted on a global basis.1 percent. Ford down 40. Honda down 33.2 percent.9 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. Toyota down 39. foreign and domestic. •The impact of the current economy and the current state of the automotive industry is not limited to the Big Three. for February 2008.•automotive sales for 2008 fell at the fastest rate of the past 34 years. . compared to a year earlier. and Nissan down 54 percent. GM was down 48. • The numbers will probably get worse before they get better. All manufacturers.5 percent.

but it was primarily felt in the American automobile manufacturing industry.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. .

General Motors. . Ford. •By 2008.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. • The popularity and relatively high profit margins of these vehicles had encouraged the American "Big Three" automakers. With fewer fuelefficient models to offer to consumers. and Chrysler to make them their primary focus. sales began to slide. the situation had turned critical as the credit crunch placed pressure on the prices of raw materials.

• Car companies from Asia. North America. which were seen to be irresponsible in light of rising fuel prices. cheaper. Europe. including the Big Three and Toyota offered substantial discounts across their lineups. . more fuel-efficient imports from Japan and Europe." foreign cars manufactured or assembled in the United States. •However. and elsewhere have implemented creative marketing strategies to entice reluctant consumers as most experienced double-digit percentage declines in sales. many of the vehicles perceived to be foreign were actually "transplants. • The Big Three faced criticism for their lineups. at lower cost than true imports. Major manufacturers. North American consumers turned to smaller.

a loss of 197. i. Two hundred thousand jobs at a weighted average of $25 per hour working for a full year represent $10. 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. The BLS also reported the loss of an additional 170.200 persons were employed in motor vehicles and parts manufacturing. then the loss of 197.  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. has been unsurpassed.100 jobs in just 12 months.4 billion in payroll. the sales and distribution arms of the industry and the after market. If the inverse of this relationship is true. .  But even these numbers .as staggering as they are . The Bureau of Labor Statistics reported that in January not tell the whole story.000 jobs among vehicle and parts dealers. or over 20 percent. 951.Automotive Employment Statistics  The loss of jobs in the U.  In motor vehicle and parts manufacturing jobs are not the only jobs impacted.100 jobs is even more staggering. Employment for January 2009 was reported at 754.100.

counties and communities.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. automotive suppliers. Consumers are holding on to their current vehicles for more than a year longer than in recent years. . The current state of the automotive industry has had a catastrophic impact on industry employees. automotive dealerships and consumers– not to mention its impact on the economic conditions of states. and many are reluctant to buy new cars when their own job may be in jeopardy.

will disappear. There will undoubtedly be winners and losers. the strong will prevail. once profitability recovers. leaner. But those that survive will be much better in quality and serviceability than any vehicles in the past. and will probably not reach double digit growth for many years. The industry will be smaller. Growth of the industry will be much slower. and probably a lot more flexible than in the past. But in the end. is more likely to be in single digits for the near term. Some of the name brand vehicles consumers have known for the past 30 or more years.The total impact and the eventual outcomes are yet to be determined. and the industry will emerge with new dominant leaders. . such as Oldsmobile for General Motors. Revenue growth.

Russia. Switzerland.The European automotive industry The European automotive industry has integrated operations and a worldwide network of joint ventures. 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. Turkey.

China. etc. development. trucks. design. The main five regions vis-à-vis which the EU has a surplus are the NAFTA and EFTA countries. EU exports of motor cars reached € 76 billion in 2010. the Russian Federation and the Middle East. It has a dense worldwide network of joint ventures.The European Automotive Industry is a leader in the global automotive market.) represent about 10% of the value of total EU exports. production and assembly sites. . EU’s biggest car trade deficit originates in this country. as the EU imports about four times as many cars as it exports. Other trading partners vis-à-vis which the EU trade balance reveals a significant deficit are South Korea. India and Turkey. production and sales. While Japan is the sixth largest destination of EU motor cars exports. with a 58% increase over 2009. Total automotive exports (including also buses. components. with integrated automobile operations that combine research.

and indirectly supports about 10 million jobs in other industries. The industry.EMPLOYMENT STATISTICS In Europe the automotive sector directly employs over 2 million people. Since 2010. due to the ending of government fleet renewal schemes in many EU countries . the economic recovery improved the general market situation. Conversely.5% that year (13. in particular for export markets.3 million units registered). The health of the sector affects roughly 8% of the EU's active workforce. the EU market for new passenger cars declined by 5. was hardly hit by the global crisis. which is active in many EU Member States and operates a dense network of supplier industries.

Chinese. additional testing requirements for EU exports. Strict rules for joint ventures or majority owned foreign companies also hamper the activities of European companies. Although high tariff barriers still seriously hamper market access for EU exporters in Asia and India. . Local content requirements and tax incentives for local producers are also applied to the disadvantage of EU exporters. it is often non-tariff barriers 'behind the border' that effectively ban EU vehicle exports to the South East Asian. excise and luxury taxes that add on to the sales price of EU vehicles. and South American markets.Fostering European automotive exports and investment through improved market access is an EU trade priority. These barriers can include burdensome and discriminatory certification requirements. 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. This type of trade barriers are the focus of the European Commission in improving trading conditions for the EU automotive sector.

working conditions and relations of forces with workers continue to be decisive issues for the employers. the factors at the origin of the recession are still present and the current return to profit does not mean exit from the crisis. or one tenth of all European manufacturing industry. Most world car groups saw a return to profit in 2010 at the price of blows against employment. The facts and data are stubborn: the car industry in Europe is not a sector on the path to extinction.Condition in Europe The recession which in 2008-2009 led to historic lows in car production in Europe. North America and Japan has for now passed. in particular for the employees. But in Europe. working conditions and wages. Levels of employment. 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. wages. .

In the 1960s and 1970s. And in the 1990s. resting on the fear of unemployment to reverse the gains and collective agreements won by employees in previous decades. the employers wish to make the car industry the example for reactionary counter reforms. but in the opposite direction. This concentration favoured the creation of relationships of force which made the sector the advanced element of workers struggles. factories with tens of thousands of workers existed in Germany. . it was the turn of the countries of Central and Eastern Europe to be sites for the construction of new factories. France. The social confrontation continues. Italy and Britain.The industrial implantations of the European car industry have been geographically extending for fifty years. under the pretext of crisis. After the old European imperialist countries it was Spain and Portugal which would constitute new areas of implantation in the 1970s.

He predicted that auto sales would sag by 5% in 2012. the fifth down year in a row. the same modes of exploitation of workers. who.. on March 20. And the R-word—restructuring—unpalatable and almost illegal as it is in Europe. and for how it sends French consumers and presidential candidates reeling. as President of the European Automobile Manufacturers' Association. read. The $10-Per-Gallon Gas Has Arrived In Paris . and the same firms selling the same products. It is necessary to examine the current conditions of exploitation of the workers.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. this time by Fiat-Chrysler CEO Sergio . All-time-high gas prices are part of the reason. He didn’t see a recovery before 2014. Thee concrete experiences in the different European counties and different firms should be shared so as to begin to construct common and coordinated responses... "Horrible" was how he described the plight of the auto industry when he spoke at the European Business Conference in Bruges. with their traditional and new forms in the context of the crisis which continues to sap all the capitalist economies. is being bandied about. spoke for all EU automakers. Europe with its relatively affluent population of 500 million has turned into a nightmare for the auto industry. It was a dire warning and a cry for help. Belgium.

5% and 17. Marchionne’s cry for help wasn’t just about saving Fiat whose EU sales dropped 16. shutter ten or so plants.2%.7% across the EU compared to last year.7% so far this year. The whole industry would have to cut capacity by 20%. registrations were down 8. Among smaller markets. It was the fifth down month in a row. or 3 million units.New car registrations in February fell 9. Number two France and number three Italy plunged 20. where hardly anything is sold anymore.2% from the already traumatized level last year.9%. down 45. And in Greece. Hungary 31. and massively lay off workers. only 3. worse even than February 2009 at the trough of the financial crisis.827 new vehicles were sold in February. But that is precisely what you can’t do in the EU. Portugal swooned 47. only Germany scraped by with a decline of 0.8%.3%.2%.8% respectively. The results would have been even worse had it not been for an extra selling day. and Rumania 54%—but among the largest markets. Some bright spots were tucked away at the fringes of the EU—Estonia was up 21. . For January and February.

But layoffs and plant closings become highly politicized.PSA Peugeot Citroën. President Nicolas Sarkozy summoned Varin and told him to reconsider laying off 6. Whatever their thinking was at the time.8%. whose February sales plunged 16. In November. 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.800 workers. which would focus on saving money elsewhere. . GM and PSA are now saying that Opel and PSA would each deal with its own overcapacity. The deal fell apart. and that plant closings weren’t part of the alliance. Layoffs will be even tougher to implement if socialist François Hollande wins the election. re-announced at the Geneva auto show that it would solve its overcapacity over the next two years. but the restructuring agreement survived and prevents GM from closing any plants until 2014. 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.

A sea change in the German auto industry.. For that inexorable and stunning process. Renault.. but there are those that can get through it and those that can’t. read. China. So he appealed directly to the EU Commission to liberalize labor markets because individual countries wouldn’t do it.Individual countries prevent layoffs. VW. the Number One Foreign Investor in Germany. The most recent deal was Kiekert. and “that’s why almost no one is making money in Europe. . and the fretting around it. BMW. Clearly. and Ford—will have to restructure. Even in Europe they weren’t faring too badly. whereas in the US. Opel.. he said. the world's largest manufacturer of automotive door-lock systems: a Chinese government-owned company bought it. the situation is “horrible” for European automakers. and Daimler are basking in last year's record worldwide sales and profits.. Overcapacity pushes prices down. the opposite happened: the government pushed GM and Chrysler to restructure during their bankruptcies as part of the bailout. And those that can’t—Fiat. Restructuring is already happening in Germany. PSA. Marchionne said and added that the French government bailed out its automakers on condition that they wouldn’t close any factories.. or get bailed out again.” Alas. with Daimler up so far this year and VW and BMW down a smidgen.

that some automotive companies are not going to survive– at least not in their current size and configuration. to stay in business. Consumer confidence has been stymied. Small to medium sized parts suppliers are finding it difficult. if not impossible. but most likely.conclusion  Dramatic changes in the global economy have driven the automotive industry to the brink of disaster. It is unfortunate. the automotive industry over the next several months. Credit financing for both consumers and manufacturers has been tightened. many of which are predicted above.  There will be additional significant changes within .