Production cutbacks, job losses, plant closures, component shortages – the pressures faced by European car manufacturers in their domestic markets have become so strong that even the relatively good business in Asia and North America has barely been able to compensate for the losses incurred at home. As the ripples of the economic crisis are starting to make themselves felt in China, competition in the People’s Republic is rising – a development that is painfully felt by European premium car manufacturers.

The latest developments have raised by another notch the consolidation pressure that suppliers to the German automotive industry have been labouring under since the crisis first began. "Suppliers especially are reeling under the immense price pressure," Michael Weigelt, managing director of Germany’s engineering plastics association Verband Technische Kunststoff-Produkte (TecPart, Frankfurt; www.tecpart.de), told Plasteurope.com.

"The price increases for plastics, the cost of which has risen by about 13% since 2009, and even up to 30% for engineering polymers, to date had been balanced out by the strong demand from the automotive industry," Weigelt explained. In fact, over the same period, suppliers were only able to push through price increases of about 1.9% for their finished parts. Now, however, as order volumes continue to drop and the industry has to contend with higher energy and labour costs, the numbers do not add up any more. On top of all this, Weigelt says the widely anticipated acceleration of consolidation measures will also impact employee numbers – although so far no such trend has emerged.

Industry experts contend that five of Europe’s car production plants have become superfluous. Whereas the US and Russian markets grew by more than 14% between January and August and China also added 9.5% despite the slowdown, car sales in the EU 15 dropped by 7.1%, figures from German automotive industry association VDA (Berlin; www.vda.de) show. The small 1.4% rise registered among the newer EU members was unable to tip the scale.

In view of the current situation, Daimler is cutting back production at its main plant in Sindelfingen / Germany and has also scrapped its 2012 financial plans, even though the group grew its sales by 5% in the first eight months of this year. Ford anticipates a loss of USD 1 bn this year "due to the crumbling business environment in Europe", and has already announced plans to cut jobs and possibly even completely shutter one of its plants. VW has lowered its sales expectations for 2012, while Opel has started sending home some of the workers employed at its plant in Bochum / Germany following a shortage of parts supplied from other facilities. In addition and despite improved turnover, Peugeot Citroen PSA is still mulling the closure of a French plant. Renault also remains in a steep decline, which the current Paris Motor Show will not be able to change either. Although almost 100 world premieres will be displayed at the show, southern European buyers especially are simply lacking the necessary funds.

Things do not look any better for Fiat: Not so long ago, company head Sergio Marchionne buried the "Fabbrica Italia" investment program, which had called for a EUR 20 bn investment in Italian production. Instead, the talk of the town in Turin centres on the poor capacity utilisation at two plants. Fiat has so far managed to stay afloat largely thanks to the help of its Chrysler subsidiary, which has been seeing good business in North America.

Of course the crisis is not confined to cars alone. Caterpillar, the world's largest construction vehicle manufacturer, recently lowered its long-term profit forecast. "We expect very modest growth up to 2015," CEO Doug Oberhelman was cited as saying. These prospects are no better than the low point in car sales Ferdinand Dudenhöffer from the University of Duisburg-Essen’s Center Automotive Research (CAR, Duisburg / Germany; www.uni-due.de/car) centre recently predicted for western Europe in 2013 – see Plasteurope.com of 30.08.2012.