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Thursday, January 17, 2013 11:09 AM


European Car Demand Near 20-Year Low; Peugeot Workers Shut Down French Plant; GM Loses Global Car Sales Lead to Toyota Once Again


GM Loses Global Car Sales Lead to Toyota Again

Auto sales have recovered in the US, but GM once again has dropped out of the top spot globally. CNN Money reports GM loses global sales title to Toyota, again.

General Motors fell to No. 2 in the global auto sales race, even as 2012 was its best year for sales since 2007.

Monday, GM (GM) announced global sales of 9.29 million vehicles. Toyota Motor (TM) hasn't announced a final sales figure for 2012, but in late December the company said it expects that global sales hit 9.7 million vehicles. Volkswagen Group (VLKAY), which includes the VW, Audi and Porsche brands, came in at No. 3 with 9.09 million vehicles, the first time the company has topped 9 million
No Pent-Up Demand in US

How much pent-up demand remains in the US? I suggest none. Rather, sub-prime auto lending is a primary driver for keeping sales somewhat robust.

European Car Demand Near 20-Year Low

It's a different story altogether in Europe where European Car Demand Near 20-Year Low.
The market for new cars in the European Union is at its weakest in nearly two decades, and recession across much of the region could dent sales further this year.

New car registrations fell more than 8% to just over 12 million last year -- the lowest total since 1995, the European automotive industry association ACEA said Wednesday. It was the sharpest decline in demand since 1993, when Europe was again lagging the world in recovering from a global downturn.

December alone saw registrations slump 16%, the industry's weakest performance for the month since 2008.

Of the major suppliers, U.S. and French manufacturers bore the brunt. Renault's registrations fell by almost a fifth, while those for Peugeot/Citroen, General Motors (GM) and Ford (F) were down by 13%. Demand for Volkswagen (VLKAF) brands declined 1.6%.

Eurozone countries that have been hit hardest by the debt crisis have suffered the worst. Registrations in Greece collapsed by 40% in 2012, closely followed by Portugal, Cyprus and Italy, where they fell by 38%, 25% and 20% respectively.

Analysts said the situation may be even worse than the numbers suggest.

"The actual decline is much worse than the statistics would have us believe, because sales figures for the year were artificially inflated as a result of self-registrations by dealers and automakers," said Peter Fuss, senior advisory partner at Ernst & Young's Global Automotive Center.
Peugeot Workers Shut Down Plant

In France, where socialist silliness and job protection idiocy run supreme, Peugeot workers shut down plant slated to be sold.
Hundreds of Peugeot Citroen workers occupied a French factory scheduled to be sold off, largely shutting down production in a protest against planned layoffs at the struggling automaker.

The Aulnay plant near Paris has been at the center of a battle over the future of France's largest automaker. The company announced last year that it planned to cut 8,000 jobs and close Aulnay as it struggles to compete in Europe's stagnant car market. The company reported a €819 million ($990 million) loss in the first half of 2012; it will announce its full-year results next month.

On Wednesday, the CGT union said 300 workers stopped all production at the plant. The company meanwhile said around 230 were out on strike — with many more absent — and that very little work was being done.

That's a small percentage of the 3,000 people employed at Aulnay, but the union said they were able to "paralyze" the factory because most of the striking employees work in production.

"Employees at PSA Aulnay refuse to accept being laid off without anything. The false negotiations begun in November give absolutely nothing at all, the management is refusing to address the demands of the employees," a statement from the CGT said. "The striking workers demand that management restart the negotiations from the beginning."

Anne-Laure Descleves, a spokeswoman for Peugeot, said the unions stage a strike once a month and the current one was only slightly worse than others.
Union Madness

Obviously the union wants Peugeot Citroen to keep producing cars it cannot sell simply to keep a few thousand people employed.

This is the mindset of unions. It never occurs to them high wages and union work rules are two of the reasons the company cannot sell cars.

Renault Will Cut 7,500 Jobs, 17% of its French Work Force

The New York Times reports Renault, Adjusting to Europe’s Declining Market, Will Cut 7,500 Jobs
France’s ailing industrial sector took another blow on Tuesday when Renault said it planned to cut 7,500 domestic jobs by 2016, or about 17 percent of its French labor force, as it adjusts production capacity to the crushing downturn in the European car market.

Of the 135,000 people Renault employs worldwide, more than 44,600 work in France. Ms. Chantegay said the plan to reduce jobs would affect only the French work force.

Carlos Ghosn, Renault’s chairman and chief executive, said on Monday at the Detroit auto show that he expected the European market to be difficult in 2013, predicting that car sales would fall about 3 percent in 2013 after contracting 8 percent in 2012.

Management, the union said, is ignoring the reality facing workers. “Instead of chemotherapy,” the C.G.T. said, “management always injects cancer cells into the enterprise.”
Renault’s CEO Proposes Study to Determine Why Consumers Are Not Buying Cars

No doubt you are laughing right along with me in response to an inane suggestion by Renault’s CEO.

When asked what governments and companies could do to address the contraction of the market in Europe, he responded "Governments should try to determine why consumers are not buying cars.

If Ghosn is serious, the board should fire him immediately.

Is it the responsibility of government to figure out why Renault and other carmaker's cannot sell cars, or is that the responsibility of carmakers?

The answer is obvious, and so is the answer to the original question.

European carmakers struggle to sell cars for the same reason sales across the board in Europe are under pressure:

Union wages, union work rules, inane government work rules on top of union work rules, high VAT and income taxes, EU rules and regulations on everything, demographics of the aging population, high youth unemployment (primarily as a direct result of inane work rules) and the Eurozone nannystate in general all contribute to poor sales.

No doubt, I have left something out. However, I am certain the above items encompass something on the order of 98% of the answer.

I provide this valuable service at no cost to the French taxpayer and also to Renault’s CEO, lest the French government actually waste taxpayer money on a commissioned study (no doubt to come up with the wrong set of answers).

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

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