Anyone who still had doubts about the dire state of Europe’s mass-market car industry should now have seen them laid to rest.
PSA Peugeot Citro?n, the larger and more financially distressed of France’s two carmakers, is heading for a big first-half loss, haemorrhaging €200m of cash a month, with little chance it will be able to staunch the bleeding before 2014. To keep the company afloat on a market flooded with discounted small cars, chief executive Philippe Varin has had to raise €1bn from investors, start cutting 6,000 jobs, and postpone crucial investments such as a plant in India. Last week he said another 6,500 jobs would go in France, and the Aulnay factory outside Paris would stop making cars from 2014. A second plant in Rennes would be scaled back.
Peugeot’s volume-car competitors are hardly gloating. Europe’s whole car industry is in the sickhouse – except a lucky luxury segment; Volkswagen; and Hyundai/Kia. Manufacturers’ dwindling cash, plant closures, and angry railing by politicians evoke memories of the US industry as it slid towards bankruptcy in 2008 and 2009, in a crisis that could have cost millions of jobs. Europe needs to learn from the way that the US reinvigorated its car industry: with tough love. GM and Chrysler were reborn in a $60bn-plus bankruptcy and restructuring supported by US and Canadian taxpayers.