Inflated Targets, Stagnant Sales Spell Trouble For Europeans

Europe's car manufacturers are sleep-walking to disaster as overambitious sales targets founder on the rocks of a stagnant market.

That's the conclusion of a leading European investment bank, which also looks in vain for a mass car manufacturer to adopt a sensible and realistic strategy that would forgo marginal sales in favor of fatter profits and a healthier future.

Deutsche Bank, in a report, said Western European manufacturers' sales projections for the end of the decade added together are 30 percent higher than the likely actual outcome. Deutsche Bank also worries that Europe's generally wafer-thin profits will be jeopardized further by new production from Koreans in Eastern Europe targeted at the West, while tough regulations to make cars emit less carbon dioxide (CO2) and be more fuel efficient (thereby saving the planet from global warming) will cost so much money there will be nothing left to allow price cuts to stimulate demand.


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jon21 - 4/23/2007 2:09:52 PM

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ok

S4cabriofoxone - 4/23/2007 2:13:31 PM

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Are these actually European car manufacturers (BMW, Audi, Porsche, Jaguar, M-B, etc.) or car manufacturers IN EUROPE?

nybimmer - 4/23/2007 3:30:48 PM

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This is an excellent analysis, thanks for posting this 009. Basically, BMW is best positioned for continued profitability, MB will have some house cleaning to do but will be OK, and VW-Audi-Bentley-Lambo will be really struggling. Look for VW group to start shedding brands - like Chrysler did with Plymouth and GM did with Oldsmobile. Bye-bye Audi :-(

I disagree that Renault, Peugeot, Fiat will be the best positioned - though their cars are cheap they are really inferior products - I'd think that a BMW or MB (with production in the US, with its weak currency) which moves downmarket could really dominate with well-engineered inexpensive products. Should be good news for US-based automakers

It is really going to be a rough time the next few years, we're cresting a cyclical boom that will soon be ending. The wealth in Europe is really concentrated and the middle class is really squeezed there.

S4cabriofoxone - 4/23/2007 6:22:07 PM

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Wow, we really don't need another "amazinBimmer."

Porsche is buying out VW, and if anyone, THEY know a thing or two about profitability. Audi will be delegated to oversee their own brand, as well as Bentley, Bugatti and Lamborghini (as long as Porsche doesn't choose to sell Lambo )-:), and they've already done an amazing job with the Lamborghini brand. The analysts predict that they will eclipse BMW in profitability by the end of the decade. I feel deeply sorry for you that you just can't face the truth. BMW is a great brand, but it's idiots like you that make my blood boil.

ctsang - 4/23/2007 4:10:00 PM

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French cars, are you kidding? We only buy French handbags for our wives; but cars, forget about it.

nvme - 4/23/2007 4:38:49 PM

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I can't help but feel that the writer of this article WISHES the European auto industry will somehow turn out wrong, by over interpreting or over analyzing the study by the Deutsch Bank (that i've read by the way):
- the margins of the European manufacturers are far from thin
- Their strategy is to build upmarket vehicles, and reinforce their upscale image, so in consequence, the Koreans will not compete with them so soon, and i trust -because they're smart business people- that they will find a way to adapt!
nybimmer, you think the wealth is concentrated in Europe? where do you live? 50 million poor people in the USA, the richest country in the world??!!
cyclical boom soon ending? wishful thinking, or at least not before the end of the petrol era!!

nybimmer - 4/23/2007 5:01:15 PM

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At least most poor people in the US can afford a car and gas to get to their jobs, which is good b/c our US public transit system is so poor. In Europe, gas is $6 per gallon and bureacracy & environmental regs makes it onorous to keep an older car on the road.

no1listensanyway - 4/23/2007 6:43:51 PM

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The EU also makes it very hard to import cars into Europe, unless of course you build plants over there. If you start building plants then you have to deal with those damn European unions. Those unions will shut down a whole city and would still be applauded. Obviously I do not know the whole story, but based on the fact that it is so hard to get a foot in the door in the European market, I would assume the Euro manufacturers will be ok for now. But once the cheap labor in Eastern Europe is officially part of the EU, things could change dramitically.

123456 - 4/24/2007 1:13:38 PM

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Texas is now teaching Germany how to be environmentally friendly?


http://www.renewableenergyaccess.com/rea/news/story?id=47322

123456 - 4/24/2007 2:26:51 PM

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...and between 1990 and 2005 U.S. greenhouse emissions increased 16%.
Germany reduced emissions by 10 percent

huu76: I would assume that these are European manufacturers since Toyota/Honda have already met these new emissions restrictions long ago.

No they haven´t.
The EU plans to limit CO2 emissions from cars to 130
grammes per km.

average emissions
Bmw 170-180g/km
Toyota 161g/km
VW 159g/km
Opel 156g/km
Renault 150g/km

GX470guy - 4/25/2007 11:27:17 PM

+1 Boost

LEXUS has been increasing every saletarget lately, because so many SMART people are buying their Quality Reliable cars over the cheap GERMAN breakdown POS!!!!!!!!!!!! the LS600HllLLLLLLl is sold out!!!!!!!!!!!!!!!!!! it is so much better than the rollsroyce phantom!!!!!! ahahahhahaewhehehehahhahhahahaiahhahajja!!!!!!!

Mmm... Lexus...