LUCA CIFERRI

Picking Europe's winners and losers for 2012

Luca Ciferri is Automotive News Europe's chief correspondentLuca Ciferri is Automotive News Europe's chief correspondent
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As the new year nears, 2012 looks bleak for Europe. Since September, forecasters have been adjusting their new-car sales predictions downward because of feared backlash from the sovereign debt crisis. The bottom line is that the experts see things dipping a percentage point more each month than than did just a couple months ago.

LMC Automotive just updated downward its 2012 western Europe passenger-car sales forecast to 12.15 million units, a decline of 5.1 percent from the expected final result from 2011.

Including light commercial vehicle sales, financial analysts at Morgan Stanley now see a 6.5 percent decline in European volume to 13.3 million units.

If the grim predictions are correct, 2012 European passenger cars could be 2.65 million units below their 14.8 million peak in 2007. That's the equivalent of nine 300,000-capacity plants.

Who will suffer most next year in Europe? The list is pretty long.

Dealers will take the hardest hit, after that, the losers will be anyone without a strong tie to the German industry.

Dealers are normally national companies, while many are really just regional players. They can't spread their risk globally to compensate for a down European market with booming sales in China.

Fiat S.p.A. and Renault SA do not export from Europe, so they will get bitten badly by any European market decline. On the plus side, Chrysler will help Fiat and Nissan will boost Renault, at least on their respective balance sheets. PSA/Peugeot Citroen doesn't have a strong, money-making alliance partner to rely on for help. The French automaker also relies the most of the three on Europe. PSA already announced 6,600 job cuts in November. More trouble awaits in 2012 unless Europe gets healthy faster than expected.

New-car sales in Europe's five largest markets are expected to be down, with Germany suffering the least because of a forecast decline from Morgan Stanley of just 4 percent in 2012. The consulting firm see the UK down 5 percent, France and Italy off 7 percent and Spain dropping another 10 percent after a 22 percent slump expected this year.

The winners will include globally active European automakers and Tier 1 suppliers that can benefit from the continuing rebound of the U.S. market as well as any growth in China.

BMW, Daimler and Volkswagen – and their Tier 1, 2 and 3 suppliers – are probably the best-positioned automakers for 2012 because they are strong exporters of vehicles built in Europe. This should permit them to keep their European production at a decent pace, unlike rivals who only make cars for Europe. Companies supplying those Europe-dependant plants better start thinking of creative ways to get through the tough times.

You can reach Luca Ciferri at lciferri@crain.com.

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