Global gains should reduce Europe pains

Luca Ciferri is a reporter for Automotive News
European automakers are poised finish the year in the black as global gains will offset losses here. That is the conclusion from a Goldman Sachs report, which forecasts that European automakers will swing to a combined net profit of 7.32 billion euros ($8.76 billion) this year from a net loss of 6.83 billion euros in 2009.

The profit drivers will be fast-growing China and Brazil and the recovering U.S. market.

Car sales in China, the world largest auto market and a profit generator for Volkswagen AG and PSA/Peugeot-Citroen SA, are forecast to rise 20 percent to 15.5 million units this year.

Car sales in Brazil, the profit source for Fiat Group Automobiles and a money maker for VW, are set to grow 10 percent to 3.3 million units.

Car sales in the United States, a crucial export market for all German automakers, are expected to increase 15 percent to 12 million units.

There are also signs that things are improving in Europe. J.D. Power Automotive Forecasting expects 12.84 million new-car sales in western Europe this year, down 5.9 percent from the 13.64 million units sold last year. That prediction is better than the 9.6 percent decline to 12.33 million units that the UK-based foresaw in February.

If J.D. Power is correct about Europe – and the other three markets remain hot – there will be a lot of happy CFOs at European automakers next spring.