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Motor Mouth articles 2012

Outlook is gloomy for motor industry

SCRAPE away the top layer of glitz and razzmatazz of the Paris Motor Show, which ends its two-week run this Sunday, and you don’t have to look far below the surface to find the reality.

Europe’s car industry is suffering like never before as the world’s economic crisis drags on. Four-plus years down the line, the statistics continue to make grim reading and factories are filling up with unsold vehicles.

Car sales are in their fifth straight year of decline. It is predicted that sales in Europe will drop another five per cent this year while factories are operating at least 20 per cent below capacity. Half of them are operating below break-even level.

Across Europe new car registrations plunged almost nine per cent in August – their 11th consecutive monthly drop – and right now there is precious little light at the end of the tunnel.

Nowhere has the crisis hit harder than in France where both Peugeot-Citroen and its great rival Renault are reeling, their situation not helped by the country’s harsh tax rules and protective employment rights, which make it difficult for them to shed jobs.

Carmakers all across Europe are hurting, although the UK’s modest sector is doing better than most. The German manufacturers are – needless to say – holding their own, although only Volkswagen are showing actual sales growth.

Customers are demanding value for their money, a situation which has certainly focused minds in the industry; the upper non-premium sectors, like Vauxhall, Ford and the French firms, are reported to be feeling the worst of the chill.

There have been some spectacular new models and a whole raft of concepts unveiled in Paris this past fortnight, but the biggest headline grabbers have generally come from Britain.

Jaguar’s stunning new F-Type has topped the bill, but McLaren have used their rare appearance at an international event to reveal their new P1 supercar, which has stolen some thunder from their Italian and German rivals.

The new Range Rover and the latest manifestation of the Mini, the Paceman, have also won more than their share of coverage as British cars respond to the constant challenge coming from the Far East, particularly South Korea.

At the top of the industry there are calls for Europe’s car-producing nations to formulate a cohesive policy so that unproductive factories can be closed before more manufacturers go to the wall.

As the Paris show approaches its end, there are few signs of a feel-good factor especially in the host nation, although for a change it is the Brits who are enjoying slightly better health.

Mostly, though, the car industry mirrors the rest of the economy and is simply hoping for the best while trying to prepare for the worst.

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