Opel, PSA and Fiat Will Continue to Struggle in 2013

PeugeotPeugeotFrance, 1882 > present120 models
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sales dropped 19.6% in 2012, and FiatFiatItaly, 1899 > present159 models
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and OpelOpelGermany, 1863 > present85 models
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have not announced their financial results for 2012 yet but are expected to be similarly down. The problem is European auto sales are not forecasted to rebound until 2015, and it could be even later than that.

According to GMGMUnited States of America, 1998 > present8 models
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, its 10-year plan for Opel involves the company partnering more with Peugeot in the near future. GM has lost $15 billion in Europe in the last decade and is desperate for those losses to end. 

“Where products are European-specific, we should use PSA. We know how to use scale, and they’re smaller and can do things quicker, it’s a good combination," said Steve Girsky, head of GM Europe. 

GM's plan is to cut costs as far as possible. It is going to shut as many factories as possible, share more parts among vehicles and expand to Russia and Turkey. 

“I’m not expecting a huge recovery any time soon in Western Europe. We can’t rely on volume to bail us out," said Girsky. 

Using PSA to develop cars will help GM but does little for PSA. Instead, it is looking abroad as much as possible to sell cars, especially in China. It sold 440,000 cars there in 2012, a 24% increase, and almost half as many cars it sold in Europe. Expect to see this strategy continue with more focus on South America as well. 

Fiat, though, is the big question for the future. Company CEO Sergio Marchionne delayed developing a new generation PuntoFiat Grande Punto - Punto Evo Gen.3Italy, 2012 > present31 versions
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in order to save money. It owns enough of Chrysler to co-develop vehicles with it, but Fiat does not own Chrysler completely. That means that it cannot siphon off Chrysler's profits to help Fiat in Italy. 

The other problem is in Europe. Lost sales mean more competition. A price war means that every car sold makes less money. The European market is expected to decline by 3% in 2013, after an 8% decline in 2012. The decline in 2014 is expected to be ever smaller, and the European auto market could break even by 2015.

The scary thing for automakers is that the only way to stop losing money is to spend more money. As sales fall, automakers went to spend less money, which means less money for new product development, which means fewer innovations and potentially lower sales. 

The other problem is that this may be the new normal. Auto sales are not likely to return to peak levels any time soon. Automakers are going to have to predict where sales will fall. 

Source: Auto Express and Automotive News Europe