European auto crisis bottoms out

The European car market will remain a battleground even as it ends its five-year slide, Renault-Nissan CEO Carlos Ghosn declared at the Frankfurt motor show.

Demanding a sign from governments to help its car market recover, Ghosn warned that significant growth was still a long way away, even if the market’s descent had been halted.

“We are confident that the slope is ending,” he said. “I think the worse is finally behind us, frankly. We are not sure that the recovery is here and we might have a few years of slow growth before it is.

“Let’s be clear: 2013 will not end up with a positive note. For the French market we obviously analyze closely and we predict between zero and one per cent growth.”

In Europe’s last “big” year, it absorbed around 18 million cars in 2007, while few are predicting more than 13.5 million in 2013.

“To make it lasting, there should be some signal given from Europe’s governments that they are visibly supporting the growth as hard as they supported deficit reduction.”

Mr Ghosn’s comments seem to reflect the general mood of industry leaders around the Frankfurt show stands.

Nissan’s Executive Vice-President, Trevor Mann, said: “Perhaps a little bit of optimism is justified, but I think the recovery generally will be slow. We should not get over-enthusiastic.”

Those comments were echoed by Fiat’s Europe, Middle East and African region COO, Alfredo Altavilla, who warned against reading too much into prediction of the slump’s end.

“The real answer is that no-one has any visibility beyond the quarter,” he said. “The trend is stabilising but it’s too soon to say that it’s picking up.”

Karl-Thomas Neumann, boss of GM’s struggling European arm, was more positive.

“We have seen the first little light at the end of the tunnel. No-one here is expecting any wonders to happen, but I’m relatively confident we’ve reached the bottom.”

While Ford of Europe boss, Steve Odell, agreed the sales slump had stabilised, he warned that it would take five or six years for it to recover to pre-slump levels.

“I can’t say that I see major signs of an uptick, but it does feel like it’s running at the bottom,” he said.

“I’ll get excited by clearer signs of recovery, but I do think we have to recognise how far it has fallen here.”

According to Ghosn, the clear indicators that the market has hit the bottom were simpler than bank, analyst and computer modeling.

“There are three signs to a recovery in our business. The first sign to a recovery is that the volume of used cars starts to go up and the second sign is the price of used cars starts to go up and the third is the volume of new cars starts to go up with it.

We are already in the third phase. This is in the making. We are about to see the end of the five-year decline,” he insisted.

But while he insisted Europe would recover, he also said that Renault-Nissan’s growth would come from outside Europe.

“When I joined, sales of Renault outside Europe made up 11 per cent of our volumes and that is more than 50 per cent today. We have not abandoned Europe, though. We will fight for Europe and have a goal to be the second largest brand.

“Europe is a fighting ground today. It’s not a growth ground – that is the emerging markets plus China and the US – but it’s a fighting ground.”

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