European Woes Drag On Auto Brands

Eurozone difficulties and fading business and consumer confidence in Europe are creating something of a black hole for global automakers in that market. So far, Fiat, PSA/Peugeot-Citroen, Ford and General Motors seem to be getting the worst of it, while Volkswagen and Toyota struggle to float on top of the difficulties.

The latest development is that politicians and unions are trying to get the Italian government to intervene to reverse Chrysler-Fiat CEO Sergio Marchionne's proclamation that the company can't give "any indication concerning future investments" in Italy because of the "economic crisis and current difficulties in the European auto market," according to Automotive News Europe.

Italy has been dancing on the fringes of eurozone difficulties along with Spain. And for months, Marchionne has been defying others in his industry by insisting that automakers need to put their heads together and figure out how to pare some of the excess capacity in the continent's car market — before the marketplace does it for them, more brutally. Marchionne even called out Volkswagen leadership this week for not being a team player on that issue.

PSA/Peugeot-Citroen announced plans to close a French factory and eliminate 16,000 jobs — something that European unionstist are not used to — while GM has said that it plans to shut a German plant and has been drowning in the financial woes created for the whole company by the sales woes of its Opel brand in Europe.

This week, GM CEO Dan Akerson — who has a few headaches of his own — said that the company is on target to get an agreement with German labor unions on restructuring Opel to improve productivity, reduce costs and cut excess capacity. Ford also has been trying to figure out how to pare its significant losses in Europe.

But meanwhile, VW has been relatively unscathed by Europe's woes — reporting record first-half profits last week — and is focusing on its global ambitions of becoming the world's largest automaker by sales and overtaking current leader GM. Toyota also is getting an easier shake from the problems in Europe because it's less reliant on European demand than GM, Ford and the Europe-based brands.

In fact, Toyota just reported a quarterly profit in Europe even while battling a declining market. Its management team might want to bottle some of that black ink for the future, because red seems destined to be the color of the auto business in Europe, at least for a while longer.