COLOGNE, Germany -- Europe remains the weak spot in the global auto industry, said Philippe Houchois, managing director and head of European auto research at UBS Investment Bank.
"Automakers profits continue to grow in China and Brazil, and are recovering in the U.S. and in Russia, while Europe remains a big question mark," Houchois said during an interview at the Automotive News Europe Congress here.
Houchois estimated that all European volume automakers are losing money in western Europe, predicting that the Volkswagen brand could be "anywhere between a zero to 2 percent margin."
Automakers themselves do not help make understanding the true profitability of their European operations any easier, he added.
Ford Motor Co. reports detailed results for its European operations, which are profitable, but, "we do not know how much Russia contributes to Ford Europe profit," Houchois said.
On a positive note, Houchois said that sales in Europe have so far been declining less than expected, but this is also supported by cheap credit, he added.
"Interest rates in Europe remain at historically low levels and this is a clear help for car sales," Houchois said.
From January to May, new-car sales in Europe declined 0.43 percent to 6,076,000 units, according to industry association ACEA.
Houchois sees Europe as likely to remain the weak spot in terms of profitability in the years to come.
"Europe was already suffering of structural overcapacity even when sales in the region peaked to 16.8 million in 2007," he said.
And, since the financial crisis began to spread at the end of 2008, the European market has declined for three years in a row, bottoming out at 14.4 million units last year.
"Basically we have in operation the same number of manufacturing plants we had four years ago, despite sales declined almost 2.5 million units," he said.
For premium automakers, it is all a different story.
"All German premium automakers are making profits in Europe, despite the fact that what they make on their home turf is just a fraction of their booming global profits," he said.