The heads of Europe's automotive and car components industry appear more worried than they have ever been. In spite of promises from various governments of support, they all claim to be driving in a fog of uncertainty.
None even dare to give the slightest indication of how the first quarter of this year will shape up. "We have absolutely no visibility," says the chairman of one large manufacturer. The latest car sales statistics from around Europe point to a gloomy picture - even in the case of some markets, such as France, that held up better than expected last year.
All European car and components companies are continuing to tighten the screws by stopping night-working shifts, overtime or by extending temporary factory closures. Investments have been put on hold and all are looking to their governments for help.
Unlike their distressed US competitors, they are not so concerned with getting direct government cash injections. Rather they want governments to intervene quickly with decisive support to stimulate demand for new cars. One way would be to crack down even harder on the banks, which are still seen as reluctant to provide the credit that will encourage consumers to buy new cars; two out of three new cars are bought on credit.
Second, car manufacturers also want governments to give big incentives to potential buyers to scrap their old cars for new, more environmentally friendly ones. France has done this and the move is expected to boost domestic sales over the next few months.
But it will not stop the French market as a whole declining again this year. Nor will it provide a significant lifeline for the two domestic manufacturers - Peugeot-Citroën and Renault - given that the French market accounts for only about a third of their overall sales.
Germany is now also considering such a plan, while Italy and Spain have done practically nothing to help their respective auto markets, which are struggling. Spain, one of Europe's top five car markets, saw its car sales drop last year to their lowest level in a decade.
The Swedish government has reluctantly agreed to provide support to its two car manufacturers but many consider the aid package to be insufficient. Efforts by the US owners of Volvo (Ford) and Saab (General Motors) to sell these businesses have proved fruitless. Daimler is understood to have decided only last week it was not interested in Volvo after much reflection.
European governments are in a bind. Governments do not have a great deal of money to spare after their other stimulus packages. And there is also strong resistance to state intervention willy-nilly for the car sector. But the problem is that the car industry remains too big an employer to ignore. It accounts for about 20 per cent of jobs in Germany and about 10 per cent in France.
The problem is even more acute in the US where the possible demise of Detroit's Big Three manufacturers could lead to as many as 3m job losses. European governments and the Brussels Commission are clearly waiting to see how the new Obama administration deals with the US car crisis. The US president-elect has already indicated his determination not to let the auto industry go to the wall.
But Europe should worry just as much about Detroit's survival as Mr Obama. For if the Big Three go, the repercussions for European car suppliers will be drastic. Equally, if the US does intervene with a massive bailout, Europe can hardly afford not to follow suit. Of course, it would be far better for competition to let the European and indeed the American car market slug it out on their own, but in reality there seems little option - particularly in this period of wider economic crisis.
The choice is between competition and jobs. For governments, keeping people in work must be the lesser of the two evils.
History lessons
Consumers may be holding back on spending, but companies show a remarkable appetite for mergers and acquisitions. At least, this is the conclusion of a recent survey by the Boston Consulting Group and UBS of top managers of 164 listed European companies conducted during one of the bleakest periods in recent financial history.
The study shows that most companies have not changed their M&A plans - and only 15 per cent believe it is too risky to do a deal now. One-third expect to make an acquisition over the next 12 months and more than 20 per cent plan large deals.
Moreover, 43 per cent believe there will be "transformational" deals this year. The report says this would be consistent with previous crises in the 1930s and 1970s when many mergers transformed the fortunes of individual companies - catapulting several into positions of long-term dominance - and altered the direction of entire industries. Will history repeat itself?
None even dare to give the slightest indication of how the first quarter of this year will shape up. "We have absolutely no visibility," says the chairman of one large manufacturer. The latest car sales statistics from around Europe point to a gloomy picture - even in the case of some markets, such as France, that held up better than expected last year.
All European car and components companies are continuing to tighten the screws by stopping night-working shifts, overtime or by extending temporary factory closures. Investments have been put on hold and all are looking to their governments for help.
Unlike their distressed US competitors, they are not so concerned with getting direct government cash injections. Rather they want governments to intervene quickly with decisive support to stimulate demand for new cars. One way would be to crack down even harder on the banks, which are still seen as reluctant to provide the credit that will encourage consumers to buy new cars; two out of three new cars are bought on credit.
Second, car manufacturers also want governments to give big incentives to potential buyers to scrap their old cars for new, more environmentally friendly ones. France has done this and the move is expected to boost domestic sales over the next few months.
But it will not stop the French market as a whole declining again this year. Nor will it provide a significant lifeline for the two domestic manufacturers - Peugeot-Citroën and Renault - given that the French market accounts for only about a third of their overall sales.
Germany is now also considering such a plan, while Italy and Spain have done practically nothing to help their respective auto markets, which are struggling. Spain, one of Europe's top five car markets, saw its car sales drop last year to their lowest level in a decade.
The Swedish government has reluctantly agreed to provide support to its two car manufacturers but many consider the aid package to be insufficient. Efforts by the US owners of Volvo (Ford) and Saab (General Motors) to sell these businesses have proved fruitless. Daimler is understood to have decided only last week it was not interested in Volvo after much reflection.
European governments are in a bind. Governments do not have a great deal of money to spare after their other stimulus packages. And there is also strong resistance to state intervention willy-nilly for the car sector. But the problem is that the car industry remains too big an employer to ignore. It accounts for about 20 per cent of jobs in Germany and about 10 per cent in France.
The problem is even more acute in the US where the possible demise of Detroit's Big Three manufacturers could lead to as many as 3m job losses. European governments and the Brussels Commission are clearly waiting to see how the new Obama administration deals with the US car crisis. The US president-elect has already indicated his determination not to let the auto industry go to the wall.
But Europe should worry just as much about Detroit's survival as Mr Obama. For if the Big Three go, the repercussions for European car suppliers will be drastic. Equally, if the US does intervene with a massive bailout, Europe can hardly afford not to follow suit. Of course, it would be far better for competition to let the European and indeed the American car market slug it out on their own, but in reality there seems little option - particularly in this period of wider economic crisis.
The choice is between competition and jobs. For governments, keeping people in work must be the lesser of the two evils.
History lessons
Consumers may be holding back on spending, but companies show a remarkable appetite for mergers and acquisitions. At least, this is the conclusion of a recent survey by the Boston Consulting Group and UBS of top managers of 164 listed European companies conducted during one of the bleakest periods in recent financial history.
The study shows that most companies have not changed their M&A plans - and only 15 per cent believe it is too risky to do a deal now. One-third expect to make an acquisition over the next 12 months and more than 20 per cent plan large deals.
Moreover, 43 per cent believe there will be "transformational" deals this year. The report says this would be consistent with previous crises in the 1930s and 1970s when many mergers transformed the fortunes of individual companies - catapulting several into positions of long-term dominance - and altered the direction of entire industries. Will history repeat itself?
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