Automotive News Europe - February 16, 2009 - 2

PAGE 2 · www.autonewseurope.com February 16, 2009 Automotive News Europe Inside this issue All eyes on Geneva 5 The auto industry is about to descend on the Swiss show, traditionally strong on new products Dealers make deep cuts Giant retailers use consolidation, closures to survive downturn Hurtej Kaur Automotive News Europe Two of Europe’s biggest dealer groups are restructuring their businesses to protect themselves against the slump in new-car sales. Inchcape is the secondbiggest dealer group by revenue in Europe and employs 6,000 people in Britain and a further 11,000 in the rest of the world. It will lose £55 million (about ¤61 million) through restructuring and writedowns in 2008 and hopes this will reduce costs by £50 million in 2009. Pendragon – the third biggest dealer group by revenue in Europe – issued a profit warning in November 2008. It has implemented measures including stock reductions, cutting payroll by nearly 20 percent and closing 75 dealerships in the last 14 months. Neither company would comment in detail on their plans when Automotive News Europe contacted them. Giorgio Elefante, an analyst at PricewaterhouseCoopers’ corporate finance division, said big groups are seeking to shrink their footprints by reducing the number of outlets they have. He said it could be argued that large dealer groups are better placed to survive this economic downturn than their smaller counterparts. “My view is that if big ones are professionally managed, they should be better equipped because they can close down and reduce work forces and can be more effective in the selling exercise than smaller ones,” he said. Porsche Holding is Europe’s biggest dealer group with 2007 revenues of ¤11.8 million. In an e-mail reply to questions, Kurt Loidl, executive director at Porsche Holding, told ANE that his company’s approach was to reduce stocks and to adapt its structures to the new market conditions. “With the wide range of brands and models of the Volkswagen group, we are in a more comfortable position than other dealer groups,” Loidl said. “Currently, customers can be motivated to buy a car only through attractive innovations and Geneva, as always, will feature a host of new models Big Push 8 Citroen appeals to its dealers to help implement a radical makeover of the brand Citroen has reworked its famous logo Some analysts believe large dealer groups could be well placed to survive the downturn. through new models. VW group’s brands hold the best cards in this regard.” Peter Bosch, a consultant with Oliver Wyman, said large groups such as Porsche Holding are under less pressure as they are strong financially thanks to their success over the last 20 years. “Porsche Holding benefits from the consolidation of smaller dealers so they have a greater market,” Bosch said. “There is no strong OEMowned retail group in the brands Porsche Holding represents.” telegraph.co.uk reported. In a statement, Inchcape CEO Andre Lacroix said the company was not immune to the current industry slowdown. “Inchcape will continue to benefit from its unique business model as we maintain our strategic focus on customer service and growth in the emerging markets,” he said. The dealer group, which issued a profit warning in October 2008, says it hopes to make an annual cost reduction of £50 million as a result of the restructuring. Pendragon said it expected to report a 2008 full-year loss of £30 million before exceptional items because of the economic downturn. Tim Richmond, an analyst at Arden Partners, told Reuters UK the “forecast losses of £30 million in the full year indicate a loss of £43 million in the second half of 2008.” Volvo confirmed that Pendragon is closing eight sites across the UK due to the current economic crisis. Nigel Ruddock of Grant Thornton financial advisors warned that dealers need to make sure they have cut costs as the economic crisis continues. Ruddock, head of the automotive team at Grant Thornton in the UK, said: “From a dealer’s point of view, if you’re doing your 2009 forecast and looking at your cost base, what you’re looking at is a 25 percent to 35 percent drop in new volumes.” Ruddock said there was hope in aftersales opportunities for dealers. He said while people will tend to defer buying a new car, they would be the ones who need a car serviced in three or four years time from a franchised dealer. Ruddock said dealers would then be in a position to take advantage of the aftersales opportunities. He said that because the current economic crisis is global, it is difficult for manufacturers to divert products to other markets, unlike the more localized crisis that hit the auto industry in the 1990s. Small is beautiful 8 Toyota has high hopes for the iQ minicar which seats three adults and one child Moving in miniature, the iQ is a bold step for Toyota Big shift in Spain 17 Nissan has slashed its Spanish dealer network and believes the new model is now ready to pay dividends Difficult conditions Sales in western Europe are expected to fall to 11.3 million units in 2009 compared with 13.6 million in 2008, according to market researcher J.D. Power Automotive Forecasting. The impact is already being seen in the UK where dealers such as Inchcape are restructuring. A press statement on Inchcape’s Web site on January 12 said: “The Group expects trading conditions to remain difficult and is engaged with its finance providers to ensure that these arrangements are appropriate for a downturn in trading.” The company will also write down £20 million on the goodwill value of its newly acquired Latvia business, due to “continued weakness” in the Baltic states, the Web site Corrections Brose aims to increase its sales by 10 percent a year and to have a profit margin of 5 percent. The company estimates that its electric motors division had sales of ¤520 million in 2008. A story on Page 7 of the February 2 issue misstated the targets and the electric motors division’s sales. Tenneco Europe boss Hari Nair expects his region to be profitable in 2008 and 2009. He did not provide forecasts regarding the financial performance of Tenneco Inc. in 2008 and 2009. An article on Page 18 in the February 2 issue was unclear about his profitability expectations. Helping dealers His advice to dealers and manufacturers for this year is to make sure they have scaled back. That means fewer people, and tightening procurement and energy costs as well as marketing. Dealers also have to market to people they do not usually appeal to. Charles de Marcilly, European public affairs director at CECRA, the European dealers association, said banks need to help dealers to buy cars from manufacturers. He said: “We need to make sure banks are playing their part. The key people in this crisis are the banks.” CECRA is hoping the economic downturn will spur new-car sales because automakers will offer more atANE tractive deals. Company Index These companies appear in stories in this issue of Automotive News Europe Alfa Romeo . . . . . . . . . . . . .12 ATU . . . . . . . . . . . . . . . . . . . . .6 Audi . . . . . . . . . . . . . . . .21, 22 BMW . . . . . . . . . . . . . .5, 9, 21 Chery Automobile . . . . . . .18 Chevrolet . . . . . . . . . . . . . . . .3 Citroen . . . . . . . . . . . . . . . .4, 8 Daimler . . . . . . . . . . . . . . . .21 Fiat . . . . . . . . . . . . . . . . . . .1, 4 Ford . . . . . . . . . . . . . . . . .4, 21 General Motors . . . . .1, 3, 20 Honda . . . . . . . . . . . . . . . . . .9 Kia . . . . . . . . . . . . . . . . . . . . . .5 Lamborghini . . . . . . . . . . . . .3 Mini . . . . . . . . . . . . . . . . . . . . .6 Mitsubishi . . . . . . . . . . . . . . .4 Nissan . . . . . . . .5, 11, 13, 17 Opel . . . . . . . . . . . . . . . . . . . . .3 Porsche . . . . . . . . . . . . . .3, 22 PSA . . . . . . . . . . . . . . . . . . . . .7 Renault . . . . . . . . . . . . . . . . . .6 Rolls-Royce . . . . . . . . . . .5, 14 Saab . . . . . . . . . . . . . . . . . . . .3 Skoda . . . . . . . . . . . . . . . . . .14 Toyota . . . . . . . . . . . . .8, 9, 21 Volkswagen . . . . . . . .3, 5, 12 Weller Group . . . . . . . . . . . .18 Sales slump forces changes for French Lawrence J. Speer Automotive News Europe PARIS France’s automakers made big changes late last week that they hope will help them emerge from the worst sales slump in decades. Renault announced a major restructuring of its sales and marketing division while rival PSA/Peugeot Citroen gave control of its Citroen brand to a seasoned sales specialist. Starting March 1, Jerome Stoll will become head of sales, marketing and light commercial vehicles at Renault. The 55-year-old Frenchman has been CEO of Renault’s sucpean volume last month compared with January 2008, according to data from the European automakers association. (See full results, Page 20) At PSA, Mercedes-Benz global sales director JeanMarc Gales has been hired to Stoll must fix Gales bring sales lead the Citroen brand. Gales, Renault’s sales. expertise to PSA. a 46-year-old citizen of Luxembourg, also has held a range cessful Brazilian operations of management posts with Volkswagen, BMW and Opel. since 2006. He replaces Patrick Blain, He has a reputation for using who will become a special ad- aggressive pricing to increase visor to Renault CEO Carlos sales volumes. He replaces Gilles Michel, who left Citroen Ghosn. Stoll inherits a sales division last December to manage the that suffered a 33.9 percent de- French government’s new cline to 72,038 units in Euro- strategic investment fund. According to the ACEA results, PSA’s first month European sales fell 24.8 percent to 128,272 units compared with the same month last year. Last week, PSA/PeugeotCitroen reported a net loss of ¤343 million for 2008. In 2007, PSA made an ¤885 million net profit, but the French carmaker was hit hard by a big slump in new-car sales toward the end of last year. Renault also posted a sharp decline in 2008 net profit last week due to a “financial and economic cri

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Automotive News Europe - February 16, 2009

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