Rating agency says that European carmakers can survive next year’s sales downturn

Article by Christian A., on September 28, 2011

Fitch Ratings said that for the next year, European automakers are not likely to be in a situation comparable to the recession. Emmanuel Bulle, senior director in Fitch's European Corporates team, said that these automakers have a leaner cost structure, broader diversification and higher liquidity compared to when they were struggling during the economic downturn in 2008-2009.

In a statement, Bulle said that the case now is different than in the second half of 2008 since there are early warning signs and the companies can prepare for the slowing down of sales.

He explained that in 2008, automakers’ inventories were very low and this resulted to a cash shortage for their working capital requirements, according to Autonews. He claims that from this experience, the companies have learned to make changes.

He said that measures have been taken by many groups to reduce or delay production at an early stage and to prevent further stockpiling. He said that it is unlikely that there will be sudden major cuts in production that will lead to “under-absorption of fixed costs.”

Fitch added that in the past couple of years, automakers have downsized, reduced the production capacity in Europe, and made its processes more efficient as well as raised the number of flexible staff. It’s easier to make adjustments since 10-15% of the total workforces of car companies are composed of temporary workers.

Renault and PSA/Peugeot-Citroen rely less on western Europe, which is the likeliest to experience a slowdown in sales and to recover the least amount of ground in the final quarter of 2011 and in 2012. But then, the liquidity in the sector is significantly better than how it was at the end of 2008.

Topics: europe

If you liked the article, share on:

Pin It

Comments

Recommended

To the proud owners and owner-to-be of the Porsche 991 Carrera GTS, there's good news for you all. German automobile manufacturer Porsche recently confirmed to the public that the Porsche...
by - March 23, 2017
McLaren diehards, this is the moment that you're all waiting for. The British automaker recently publicized the teaser outline of its new automobile that will hit the streets soon, dubbed...
by - March 23, 2017
PSA seems very confident about conquering the world. The purchase of Opel/Vauxhall for €2.2 billion ($2.3B) from General Motors makes PSA the second largest car company, just behind the Volkswagen...
by - March 23, 2017
Reporting for duty. It’s been a year since the Victoria Police was loaned a new Mercedes-AMG GLE 63 S Coupe. In those 12 months, the coupe served as the law...
by - March 23, 2017
After making its debut at the Paris Motor Show last year as a concept car, the Trezor by Renault managed to bring home the 2016 Concept Car Design Of The...
by - March 23, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries