General Motors (GM, Financial) and Ford (F, Financial), America’s favorite car makers, have been struggling for some time to gain ground in the European markets. The region with its not-so-flourishing economy has been causing pain to the Detroit auto makers, clearly visible in the poor sales and profit figures. What’s behind all this? The answer is depressed demand and low consumer confidence. While several other car makers bagged strong numbers, for GM and Ford the latest sales figures resonated the same trend, yet again. Analysts are not very hopeful for a turnaround in 2015. Here’s a lowdown on the situation.
Source: General Motors
A deeper look at the numbers
The two Detroit automakers’ November sales declined in Europe, though the overall auto sales volume improved in the economy. According to European Auto Manufacturer Association, the region’s total November sales came to 919,220 units, translating into a surge of 0.9%, suggesting that 2014 has been a kind year for automakers. Total car sales in the first 11 months were up 4.9% to 11.2 million, largely driven by Volkswagen (VLKAY, Financial).
However, General Motors and Ford have been pushing hard to regain hold in the European market. The automakers have been pulling their resources together and investing in the regions to revive sales with Ford tasting some success. The company’s sales in Europe through the first 11 months have shown an improvement of 3.6% to 824,157 units, suggesting that its efforts are paying off. Though the last month sales fell 7.1% to 60,705 units, analysts are optimistic regarding the Blue Oval’s long term prospects in the region. Ford’s market share lowered from 7.2% to 6.7%. General Motors, in contrast, is still riding on a rough road. During November, GM’s sales came in around 60,000 units - a fall of 12.6% year-over-year. The company’s market share reduced to 6.6% from 7.6% last year. So far, GM has sold 4.2% less cars than last year.
Who all gained wider coverage in the market?
The first is Volkswagen. The German automaker’s sales have gone up 6.2% during the first 11 months of the year, and the rise in sales of its brands such as Audi, Skoda, SEAT supported the carmaker to expand its market share from 26.3% to 26.5%.
Next, Toyota (TM, Financial) witnessed a sales gain of 4.2% to 42,630 units in Europe. This got reflected in the company’s market share that improved from 4.4% to 4.5%. Jeep, on the other hand, had an incredible run during the month. Its sales spiked to 4,591 units, which is more than twice the sales figure registered last year. To date, the company has sold 31,602 cars, a staggering rise of 58.1%. Industry experts believe its sales will shoot up further once Jeep introduces the new compact SUV Renegade next year.
Can we expect better numbers for the two in 2015?
Europe was kind to some and stern with others in November. While sales dipped 2.7% in France and 1.8% in Europe’s biggest car market, Germany, U.K., Spain and Portugal were the better markets that registered growth numbers. Industry specialists estimated that sales in Europe will grow nearly 5% in 2014, and numbers seem to be in line with the prediction with only a month to go. Taking things forward on a positive note, analysts were initially hoping 2015 to be a bullish year. However, issues related to Russia have cast a dark cloud. Besides, there are concerns regarding the outlook of euro currency zone. So the cloud of uncertainty regarding Europe’s revival isn’t clear yet.
As far as the American automakers, GM and Ford, are concerned, November was definitely a depressing month. Perhaps buyers are waiting for new models that are around the corner and therefore holding back their purchases. As of now, it’s difficult to predict how things would turn out to be, especially with issues related to Russia and euro crisis in view. Expecting a brighter 2015 seems to be asking for a little too much.
