Carmakers build brands in Europe

7 March 2013
GENEVA: Automakers such as Renault, General Motors and Ford are relying on strong branding and innovation to return to growth in Europe, where the car industry faces substantial challenges.

Totals from the European Automobile Manufacturers' Association show that the number of new vehicle registrations in the European Union fell by 8.2% on an annual basis in 2012, to 12.1m units.

Ford, General Motors and Peugeot Citroën all logged double-digit declines on this metric, while Renault recorded some of the worst figures, down by 19.1% compared with 2011.

"Europe is going to be a very tough market for a while. It's not about only 2013. It's also about 2014, 2015, 2016," Carlos Ghosn, Renault's CEO, told the Associated Press. "The only question is, is it going to be bad or very bad?"

In response, Renault is trying to find original ways of engaging consumers at a time when many are delaying big-ticket purchases due to the financial climate.

"Our industry is not an industry of rationality. It's also an industry of emotions. It's about brands, it's about attractive cars, it's about power, it's about handling, it's about opinions, it's about status," said Ghosn.

For its part, General Motors, the US giant, is boosting its expenditure on marketing, introducing new models – like the Cascada sports car and Mokka SUV – as well as rationalising its operations.

"We are spending billions of dollars in an effort to bring our European operations back into profitability," Karl-Thomas Neumann, president of General Motors' European operations, told the Financial Times.

While Ford, another American group, is seeking to reduce its overall manufacturing capacity in Europe, it is also scheduled to launch 15 models in the region during the coming five years.

"Our new product introductions are the core of what we are doing in Europe to improve our financial performance," Stephen Odell, Ford's president for Europe, the Middle East and Africa. "Without new products we are not going to get very far."

Sergio Marchionne, the chief executive of Fiat, suggested the austerity politics being pursued in countries like Italy were bringing mixed results, but did not want governments to help fund the sector.

"I prefer not to have incentivised items; I like natural demand," he told BloombergBusinessWeek.

Data sourced from CNN, Financial Times, BloombergBusinessWeek; additional content by Warc staff
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