Just when US consumers decide they want smaller, fuel-efficient European-style cars, Europe is no longer the place to build them.
This newfound appreciation for thrifty cars with flair should be creating a golden age for European automakers. It is not.
General Motors wants European-market cars to sell in the US, but will have its Korean arm design and build them. Ford wants Fiesta-sized cars for the US, but affiliate Mazda will
design them in Japan.
Renault revolutionized developing markets with its roomy, low-cost Logan, but builds and develops them outside western Europe. Toyota is developing a Euro-style, low-cost car. But it will do so entirely in Russia – and supervise from Japan, not Brussels.
The world is turning to European style cars. Asian brands put design studios in western Europe. Chinese automakers hire Europeans to design cars and powertrains. Suzuki says all its future cars will have a European look.
Victims of own success
Europe is a fabulous breeding ground for fine cars, but as an auto-manufacturing site it is losing its competitiveness. Beyond Europes macro-economic woes, traditional European automakers are trapped by their own past success. As they transformed society and thrived, they shared the wealth with workers: better pay and hours and guaranteed jobs.
Not surprisingly, those well-paid workers are reluctant to give up past gains. So the place that invented and perfected small, spirited cars is the wrong place to build them.
That doesnt have to be. The European auto industry is hugely innovative. Europeans can still compete on a product level. Indeed, they dominate the rich end of spectrum. But Europes mass-market carmakers cannot also make enough profits to reinvest in designing even better cars. Thats a slow death spiral.
Europeans often remark how quickly each new emerging automaking country learns from its predecessors. But can Europeans learn to compete with challengers any faster than their colleagues in North America?
E-mail Jesse Snyder at [email protected].