We have heard a lot of news over the past 12 months about the slowing economy and the effect it is having on major American automakers like Ford Motor (NYSE: F) and General Motors (NYSE: GM), but how are some smaller overseas automakers performing? As you may have guessed, the pain is not solely being felt by American automakers, and several European automakers are taking some measures to offset the slowdown. PSA Peugeot Citroen SA, France's biggest carmaker, warned it expects a decline of 4% for West European sales this year, while Fiat SpA, Italy's biggest automaker, announced it plans to shut Italian plants on concerns about soaring record oil prices and increased inflation.
Hurt by declining consumer spending, Fiat saw its sales plunging 16.5% in June. But this was not the worst and Peugeot warned about "an even greater slowdown" for European demand in the second half of the year. "The rest of the year is going to be a disaster for European manufacturers,'' Stephen Pope, London-based chief global market strategist at Cantor Fitzgerald Europe, stated in a report on Bloomberg.
Fiat said it would close the doors of four factories for three weeks, which will result in lower production of Multipla vans, Alfa Romeo models and the Grande Punto hatchback. In addition, the automaker's workforce will feel the impact as layoffs are expected to affect four of its six Italian car plants between the months of September and November. The company's layoffs will impact around 22,000 Italian workers, which represents around 75 % of its total Italian workforce.
For Peugeot, Europe's No. 2 carmaker after Volkswagen AG, the current situation is not looking any better. The company tried to focus less on smaller models that brought lower profit and low-margin deals with fleet customers and rental firms, which resulted in a drop of 7.9% in U.K. sales.
Just don't be too disappointing or concerned because there is always room for even worse results, and further declines and production cutbacks are expected.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.
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