Carmakers are bracing for lower sales in Europe this year as incentive programs end, while elsewhere companies are seeing opportunities in their competitors' product recalls.
Car sector executives gathered in Geneva for the annual auto show on Tuesday spoke of a challenging market at best in Europe this year, with Germany looking especially gloomy after the country was one of the first to end its scrappage program.
The (German) market this year will be down 25-30 pct, said Philippe Varin, chief executive of PSA Peugeot Citroen. Germany is clearly the area which is very weak.
A boost of sorts was provided away from the auto show by U.S. carmaker General Motors, which separately said it would triple its funding of European arm Opel and cut its request for state aid in a bid to win over European governments and labor.
Earlier, South Korea's Hyundai Motor Co announced a sharp rise in February sales, benefiting from recall woes at rival Toyota Motor Co, which planned aggressive incentives to win back U.S. customers.
Toyota's recalls, totaling 8.5 million vehicles globally due to uncontrolled acceleration and braking glitches, have hurt its reputation for quality and shone a spotlight on vehicle safety issues.
STRONG START IN EUROPE
Data released on Monday showed car sales rose sharply in February in France, Italy and Spain as scrappage programs lifted business, but the European carmakers are set to face tougher times ahead as governments phase the schemes out.
While France's scrapping incentive is in place until the end of 2010, Italy said last month that it would not renew its scheme, and Germany's ran out in early September.
We have some not so good news on the Italian market because the scrappage scheme has not been carried over, and the German market is pretty weak for the time being, Varin said.
He said PSA was maintaining its assumptions of a 9 percent fall in Europe as a whole this year.
Toyota Motor Europe Vice President Didier Leroy said in Geneva that Italy, Greece and Germany were particularly weak markets in February.
In Germany, nobody is selling anything, he told reporters on Monday, noting that Europe's biggest market looked set to shrink by more than a million vehicles this year from last.
That forecast was in line with the view of Germany's own VDA carmakers association, after February new car registrations in Germany fell 30 percent from a year ago, when levels were at a decade high thanks to the government incentives.
After the domestic market rose above 3.8 million units in 2009 a normalization to a volume between 2.75 million and 3 million car registrations is expected in 2010, VDA President Matthias Wissmann said.
On average that is over 3.3 million new cars, so these two years on average are clearly above the mid-term market volume of 3-3.1 million units.
German carmaker Opel said on Tuesday the additional funding to be provided by GM would provide enough cash to operate through the end of this year. It had previously said it had enough liquidity to last well into the second quarter.
GM said it would provide 1.9 billion euros ($2.57 billion) in equity and loans to Opel, up from the 600 million euros first earmarked.
Beyond Europe GM, the largest U.S. automaker, was expected like Hyundai to have benefited from Toyota's recalls, but now faces its own albeit smaller problem.
The company is voluntarily recalling 1.3 million vehicles in North America to fix a power steering problem linked to 14 crashes and one injury.
Its vice-president in China Chen Shi said on Tuesday it did not expect to see any impact in China from the decision.
(Writing by Hans Peters, editing by Will Waterman)