Price discounting in Europe said to have reached 'scary' levels
PARIS (Bloomberg) -- Price discounting and self registrations by automakers trying to boost business in Europe's slumping car market have reached worrying levels, executives at General Motors Co. and Ford Motor warned.
Susan Docherty, head of GM's Chevrolet Europe subsidiary, said Fiat and PSA/Peugeot-Citroen are producing "very scary numbers" with discounts of as much as 30 percent off gross sale prices. "Nobody can make money in Europe when you've got incentives at that level" she said.
The deteriorating environment is being driven by government austerity measures and declining consumer confidence, Docherty said.
"In the past, countries have been able to stimulate the industry through scrappage programs," she said at the auto show here. "The countries are in such a state that they don't have the ability to pull those levers. We're not seeing any quick fixes to this."
Ford of Europe's sales chief, Roelant de Waard, said his company is trying to limit its participation in self-registrations to protect profit margins but "you have to live with the realities of the industry."
He added: "If you don't participate in something that is a phenomenon, that would make you uncompetitive. It is a very aggressive environment and until either demand picks up or capacity is adjusted to the situation, it's unlikely to change.
Ford estimates that 30 percent of eight-month sales in Germany were self registrations, with the outlets then selling the vehicles at a heavy discount as a used car, and all automakers are participating.
Auto dealers in Germany, the region's biggest economy, offered discounts on average of 12.1 percent off the sticker price last month, according to Autohaus PulsSchlag.
The ACEA carmakers trade group in Europe forecasts that sales in the region this year will be at the lowest level since 1995.