Euro Zone break-up may seriously affect VW Golf, Fiat Panda
By Jonathan, 22 Dec, 2011. 0 Comments
2011 Vw Golf GTI Edition 35
The unraveling of the euro could mean serious troubles for Volkswagen Golf and possible blessings for Fiat Panda. Together, the Golf and the Panda are older than the European Union. Beyond the immediate economic fight, a north-south break-up -- wherein Spain, Greece and Italy left the currency -- would change the industrial map. This would topple ten years of supply relationships and investment decisions based on monetary union.
Alexander Law, Paris-based head of economics consulting firm Xerfi Global, explained that there will be "no winners among European car makers" once the breakup happens. However, he explained that there are various degrees of "loser," adding that the profitability of domestic production is a major factor.
With the break-up, an emergence of a stronger German currency is anticipated. This will increase domestic production costs and erodes the competitiveness of exports such as the Golf, which was first sold in 1974. On the other hand, Fiat's 31-year-old Panda mini will potentially be more attractively priced abroad as a new lira sagged under Italy's public debt.
Auto analyst Sanford C. Bernstein at Max Warburton explained that the German industry would find itself operating with a re-established deutschmark and its export competitiveness crippled. He cited that a free-floating national currency would be 20-80 percent stronger compared to the rate in 1999 when the country's currency joined the euro. [source: Autonews]
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