The Volkswagen Golf and Fiat Panda are, together, older than the European Union, but the euro's unravelling could mean serious headaches for one and potential blessings for the other.
Beyond the immediate economic fallout, a north-south break-up in which Italy, Spain and Greece abandoned the currency would transform the industrial map, upending a decade of investment decisions and supply relationships based on monetary union.
If this happens, there are no winners among European car makers, said Alexander Law, Paris-based head of Xerfi Global, an economics consulting firm. But there are different degrees of loser, and a lot hangs on the profitability of domestic production.
A break-up would likely see the emergence of a stronger German currency - whether a restored deutschmark or more select euro - raising domestic production costs and eroding the competitiveness of exports like the Golf, first sold in 1974.
By contrast, Fiat's
The German industry would find itself operating with a re-established deutschmark and its export competitiveness crippled, Sanford C. Bernstein auto analyst Max Warburton said.
He cites estimates that a free-floating national currency would be 20-80 percent stronger than the rate at which the deutschmark joined the euro in 1999.
Car makers are bracing for the impact, quietly.
Executives at Volkswagen
He requested anonymity due to the sensitivity of the subject.
I don't even want to imagine that at all, and I don't believe it will happen, said BMW
Fiat boss Sergio Marchionne was also dismissive.
You can do all the planning you like, he told reporters. These are such seismic movements that no plan will work.
If the euro zone does disintegrate, automakers will be on the front line because of their high labour costs and political barriers to restructuring.
Companies face a complex calculation of outcomes for each factory, product, supplier and market. If France stayed in a smaller euro, Peugeot and Renault would also be squeezed at home while their plants in Spain became more competitive - as could Seat, Volkswagen's Spanish brand.
Still, Britain's proliferation of foreign-owned car manufacturing since the pound's 1992 exit from the pre-euro exchange rate mechanism shows the benefits of keeping a national currency that can devalue to stay competitive, Xerfi's Law said.
The British car industry may no longer exist in terms of native brands, but it's still strong in terms of output and workforce, he said. The euro helps German exports and saps demand for Italian goods because it is weaker than the deutschmark would have been, and stronger than the lira.
NEW EXPORT BASE
Fiat is repatriating Panda production from Poland to Naples, following an 800 million euro factory upgrade. The move, agreed under political pressure in return for a more flexible union contract, was not an optimal solution from a purely industrial point of view, CEO Marchionne said last week.
But the compromise could pay off if an Italian euro exit softened wage costs for Fiat's 68,000 domestic workers, narrowing the gap with eastern European economies.
If Marchionne saw the competitiveness of his Italian plants increase 30 percent, I think it would be an important factor, said Mizuho Bank economist Riccardo Barbieri, adding that foreign automakers might also use the country as an export base.
Italy has lost competitiveness since the euro's introduction, so the only silver lining in a currency break-up would be manufacturers' ability to sell products more cheaply abroad, he said.
Volkswagen, Europe's biggest carmaker, last year exported nearly half of the 2.12 million vehicles produced domestically and 70 percent of its Golfs - most assembled near its Wolfsburg headquarters in a plant the size of Gibraltar. The group has 181,000 domestic employees.
A stronger currency would weaken the Germans in China and the United States where exports have surged for BMW and Daimler's
That would threaten $19 billion (12 billion pounds) of export revenue for each premium automaker and $8 billion for Volkswagen, according to Bernstein estimates. A 10 percent currency gain would cut 2012 earnings by 14 percent for Volkswagen, 19 percent for Daimler and 22 percent for BMW.
Volkswagen nonetheless enters the crisis as the region's most profitable mass car maker, with a 4.7 percent operating margin for the VW brand - compared with Fiat's 2 percent - and a plan to lift sales by one-third to 10 million vehicles in 2018.
Its European sales jumped 7.4 percent in January-November, bucking declines of 1.4 percent for the market overall and 12 percent for Fiat, the worst performer.
The sheer scale of the fallout could swamp any benefits for Fiat. The Italian carmaker, which has built a 54 percent stake in Chrysler since 2009, is among the most exposed to southern economies, where collapsing demand offers a foretaste of the deep slump a euro break-up would spread across the continent.
A currency break-up would unleash such enormous consumer retrenchment that I wonder whether Fiat would survive in Europe, said London-based Credit Suisse analyst Erich Hauser. There might not be an Italian-made Panda.
Any advantage from a restored lira would be offset by the inflation of Fiat's raw-material costs, parts prices and 17 billion euro gross debts, Hauser said. Although the Germans might have a competitiveness problem, their debt won't appreciate and their cash piles will be worth more.
If there are any real winners in a euro break-up, observers agree, they won't be European.
With their home markets and industrial strategy smashed, the continent's automakers would be easier prey for South Korea's Hyundai <011760.KS> and Kia <000270.KS>, whose joint share of European sales has doubled since 2003, to 5.1 percent.
Japan's Toyota <7203.T>, still repairing the reputational damage from almost 20 million safety recalls since 2009, could also use a more favourable exchange rate with northern Europe to reverse a four-year slide in market share.
It would solve one of Toyota's main problems, which is the strong yen, said Ferdinand Dudenhoeffer, head of the Centre for Automotive Research at the University of Duisburg-Essen, Germany. This could be their big chance for a comeback.
(Additional reporting by Silvia Aloisi and Stephen Jewkes; editing by Chris Wickham)