The motor industry in Thailand may be going ahead with very positive growth, but the same cannot be said for Europe, which is going through the automotive doldrums. PSA Peugeot Citroen has been losing USD 259 million a month, despite closing one plant and 10,000 jobs, and is now hanging on with massive loans from the French government.
Frost and Sullivan state that the problem lies not really with Peugeot, but with the European Automotive industry and the current economic climate. Peugeot faces two problems; one is selling cars, the other manufacturing costs.
In the current climate, consumers might have stable salaries, but the daily expenses for food, oil, and rent are on the increase. To save money, consumers buy less cars in order to reduce their cost of living. Especially the generation Y, those up to 30 years old, prefer their iPhone, and social networking via Facebook, instead of wanting to own a car anymore. This has an impact on the selling factor.
Regarding the car manufacturing costs, taking a general European perspective – if you compare a number of European countries and their respective manufacturing costs, then the figures speak for themselves: car manufacturing costs in France are 36 Euros per hour, in Germany 36 Euros, in Poland 6 Euros per hour, in the Czech Republic 10 Euros per hour, and finally in Romania 3 Euros per hour.
The bottom line of this is, that it is very hard for Peugeot to compete with cars manufactured in Eastern Europe.
Ford (Europe) is also seeing threats to liquidity, and has announced that it will be shutting one plant in Belgium and moving production to Spain (Valencia). GM is also shifting production of some models to the UK, rather than Europe.
