Europe at the quarter

After 3 months we’re down 7.7% for Europe (27) markets. A bit worse than my -5% expectations and the bifurcation of German and Latin are even wider than I expected.

Germany +1.9%
UK +0.9%
Spain -1.9%
Italy -21%
France -21.6%

Two points of note: First is that it looks like Spain and Uk have found some bottom, although Spain’s -4.5% March number makes me wonder whether the market could test lows again this summer as political actions cause more austerity.

Austerity is the word for Italy, and at times I wonder whether this collapse actually works in Fiat’s favor as they fight to close at least two local production facilities. After all, if Italians aren’t buying Fiat or Alpha product, how can they ask to keep the plants running.

For France I sense a attitude of concern as we head into this weekend’s election. Inevitably we’ll Sarkozy -v- Hollande and if as expected Hollande prevails one has to wonder what that does to PSA’s need to trim down. I don’t see any upside. Also a shift to the left may assuage workers for the moment, but there is palpable concern by enterprises who will be less likely to expand at home giving consumers a reason to spend on A new 208. I expect the uncertainty to extend well beyond the final ballot in May.

At this point no one knows what will happen beyond Q2. There is a good crop of new product, but I “Latin Malaise” lingers as I expect it to, we’re looking at 8-10%.

Comment: Renault needs to boost intl sales and address that Korean issue, but it’s better off than Fiat. Don’t expect Brazil to bail anyone out this year either. Germans are in a better position, despite the rumors of VW ruthlessly gobbling up market share which may also be shift of VW for Seat and Skoda.

Interesting question for GM and Ford: with US running strong, what’s the downside once we find bottom in Europe? Not a trick question, there are plenty of risks, but it’s a question worth contemplating


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