Automotive News Europe - January 2013 - 5

AUTOMOTIVE NEWS EUROPE

COVER STORY

did with the Prius. Europeans bought about 10,000 EVs in 2011 and almost 8,000 in the first half of last year so volume is rising from a very low base. The Zoe has the potential to create a true niche for the EV in Europe, or it could flop, which would be a blow to Renault as it has capacity to make 150,000 units of the EV a year. Another dynamic worth watching is how people react to Renault’s plan to sell the car but lease the battery. In France, the Zoe retails for 13,700 euros after a 7,000-euro state subsidy. It costs 79 euros a month to lease the battery.

because of the safety controversy, the price of keeping a car cool will be make a lot of people very hot.

Inventory hangover
Europe ended 2012 with almost 4 million unsold vehicles, estimates Morgan Stanley. “We are surprised that a wide range of extended shutdowns have not been announced in Europe in December. We fear some automakers may have prioritized free cash flow over channel cleansing into year-end, leaving an ‘inventory hangover’ in the new year,” Morgan Stanley warned in a note to investors last month. Europe has an estimated 84 days of sales piled up on car lots. This compares with about 70 days in the United States, 44 days in Brazil and about 40 days in China. The analyst also believes that the glut of cars could force automakers to reduce European production by 13 percent in the first quarter. The double-digit decline is expected to contribute to a 4 percent decrease in global first-half production, resulting in the first worldwide drop in vehicle output since the second quarter of 2011.

High-speed hybrids
The hybrid race is about to pick up some serious speed as Ferrari and Porsche launch supercars with gasolineelectric powertrains. Ferrari’s first hybrid system will be in the unnamed successor to the Enzo supercar. The new, limited-edition Ferrari will provide more than 900hp. Ferrari has not revealed the price of the car. Porsche’s hybrid system will go into the 918 Spyder. Limited to just 918 units, the new Porsche will offer nearly 800hp and start at 645,000 euros plus taxes in Europe and $845,000 in the United States.

The Ferrari Enzo’s successor will have a hybrid system as well as a 900hp engine (shown). longer. PSA’s plant in the Paris suburb of Aulnay is set to close in 2014, but the company faces a long negotiations. Ford will shut a plant in Belgium and two in the UK starting in 2014 at the earliest. Opel won’t close its Bochum, Germany, plant until 2016. The bottom line is that Europe will get no relief from overcapacity this year. Because of this, analysts at Polk estimate that Europe’s car plant capacity utilization will slip to 75 percent in 2013 from 77 percent last year. A plant should use between 75 percent and 80 percent of its installed capacity to break even, industry watchers say. Strangely, the two automakers that Polk estimates had the worst utilization level in 2012 – Fiat (51 percent) and Toyota (58 percent) – have not announced any plant closures yet.

Koreans cool off
Hyundai and Kia continue to defy the European downturn – both brands had double-digit growth through November in a total European market that fell 7 percent. But even the fast-growing South Korean automakers are being forced to adjust their ambitious plans. Last September Hyundai said it would need until 2016 rather than 2015 to boost its European market share to 5 percent from 3.4 percent. Kia has pushed back its deadline twice for achieving a 3 percent market in Europe. The first target year was 2013, then 2015 and now Kia thinks it will take until 2016 to hit the target. Last year, Kia had 2.7 percent share in Europe.

Hot air
A debate is raging over the safety of a new air-conditioning refrigerant. When testing HFO-1234yf last summer in simulated crash tests, Daimler found that a mixture of the refrigerant and air-conditioning compressor oil released under the hood of a car could ignite on the hot surface of an engine, releasing a deadly gas. SAE International, an influential automotive engineering association, says that HFO-1234yf is safe, according to preliminary test results released last month. U.S. conglomerates Honeywell International Inc. and DuPont Co. both make the new refrigerant, which also happens to be the only product of its kind that meets the new European Union climate guidelines that take effect this month. Daimler’s discovery sent the industry, and Brussels, scrambling to find out whether years of tests that showed the product was safe were, in fact, flawed. HFO-1234yf already costs five times more the coolant currently used in cars. If supplies of the coolant run short

VW Golf
It will be interesting to see whether the new Volkswagen Golf will be able to buck the downward sales trend in Europe and somehow give the entire market a bit of a boost. That is a lot to expect, but we’re not talking about a niche car, we’re talking about Europe’s best-selling model. Positive signs were already visible late last year as November sales of the sixth- and seventhgeneration Golfs were off just 4.4 percent in a total market that dipped 8.8 percent during the month. It is a safe bet that the new Golf will be one of the few bright spots for the European auto industry this year. Nick Gibbs and Reuters contributed to this story

Overcapacity
In order to address chronic overcapacity and slow the escalation of a profit-killing price war in Europe, three automakers announced plans last year to close a combined five plants in the region. The problem is that none of the closures will happen this year. That means PSA, Ford and Opel will struggle to keep their losses under control in 2013, if not

JANUARY 2013

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Automotive News Europe - January 2013

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