LUCA CIFERRI

Why Turin and Detroit are worlds apart

Luca Ciferri is Automotive News Europe's chief correspondentLuca Ciferri is Automotive News Europe's chief correspondent
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After a week in unseasonably warm, uncharacteristically upbeat Detroit, I am back home in the outskirts of Turin where the temperatures are frigid and the economic outlook is downright depressing.

The week's first serving of pessimism for Europe came from investment bankers at Goldman Sachs. They see the following for western European new-car sales: down 5 percent this year to 12.2 million from 12.8 million in 2011 and flat in 2013.

On the flipside, Goldman Sachs sees U.S. sales, which were up 10 percent in 2011 to 12.8 million, rising 5 percent to 13.5 million. That number seems conservative as many attending the Detroit auto show and the Automotive News World Congress last week see the U.S. market nearing 14 million this year and climbing to 14.5 million in 2013.

Back in Europe, where some experts see 2012 sales slipping as much as 7 percent – slashing 750,000 unit sales rather than 600,000 from the total – we're bracing for the second downturn since late 2009/early 2010. At that time, many European countries came to the rescue of automakers by subsidizing new-car sales with government-funded discounts of up to 5,000 euros.

Without those incentives, the sales decline and the overall impact to the European industry would have been brutal.

This time, I doubt if there will be any public money given to help encourage car sales because many governments are battling just to pay their own bills.

Put plainly, the European automotive industry is at risk of plant closures and sweeping job cuts. Unlike their U.S. counterparts, European automakers closed just two plants (General Motors's facility in Antwerp, Belgium, and Fiat's plant in Termini Imerese, Italy) as a result of the last crisis. If European sales slip by the equivalent of three to four plants' combined capacity, then factories are likely to be shut -- or at the very least idled.

Adding to the drama will be elections in France this year and Italy in spring 2013.

It will be an interesting period for Europe, but I already miss Detroit's air of optimism. Well, at least it's not all bad back home: An espresso here tastes much better.

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

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