Honda website
Honda website

JULY 14, 2003

Bad tidings from the car markets

The last week has seen the publication of half-year results for many of Europe's big car manufacturers. According to the latest figures the car market in Western Europe as a whole is down 2.6% in the first six months of the year with market leader Volkswagen down 4.8%. Europe's second biggest carmaker PSA Peugeot Citroen was, however, able to increase its sales by 1.9% despite a French car market which was down 7.8%. This hurt rival Renault which reported that its global sales were down 4.5%. The company has however gained market share in Europe. BMW has been preparing for the launch of the new 5 Series but the first half results were flat despite booming sales for the Mini.

Hyundai, Land Rover, Seat, Citroen, Mazda and Honda have all increased sales in Europe while Ford, Fiat and DaimlerChrysler are all reported to have lost market share. German newspapers are reporting that Ford Europe is going to make further cost reductions at its plants in Cologne, Saarlouis and Valencia.

Ford of Europe chairman Martin Leach was quoted as saying that "We need to cut costs further to keep our heads above water" because of the "deteriorating situation of the European automotive industry". Leach added that "everyone should understand just how critical the position is."

A recent study by J D Power and Associates found that Japanese cars dominate surveys of reliability and that European brands are slipping. Porsche, Jaguar, Saab and BMW performed above industry averages in the survey, but many others did not. The most reliable cars, according to the survey, were from Toyota offshoot Lexus.

The latest figures will do nothing to bolster the credibility of the GPWC, which is claiming to be preparing for a rival series to F1 in 2008. The major problem at the moment appears to be that the car companies are unable to commit to long-term deals with the F1 banks which will be seen as liabilities on their balance sheets and this cannot agree to underwrite the new series. Unless they are willing to do that, the GPWC is going to continue to suffer from a lack of credibility and as such will have less of a voice in the current negotiations over the future of the sport.