Europe's auto collapse feels like a rerun
Jason Stein is editor of Automotive News.
Dealers can't finance their floorplan. Incentives are running at 30 percent as sales hit historic lows. Some companies are stockpiling inventory just to keep the factories running. Cash is burning.
Detroit, circa 2008?
Yes and no.
It was Detroit's model, and it's now the European version.
And if you feel you've watched this movie before, sit down over lunch with Renault-Nissan COO Carlos Tavares who was a ringside observer at Nissan's Tennessee headquarters when the world crashed. Fortunately, he took great notes.
"It's exactly what happened in America four years ago," Tavares said last week during my visit to Renault's headquarters just southwest of Paris. "The lesson hasn't been learned. We can't operate the same way."
Tavares knows plants must close. He has agreed to throttle back on inventory because he has to.
"We have a competitiveness problem," he said.
There is little debate over the extent of the mess. But what is particularly disturbing is that a good portion of the world didn't learn the lesson.
Sure, the confluence of events in Detroit four years ago, followed by the tragic and horrible natural disasters in Asia, led to a reset of the North American car industry. And yes, it is easier to close a plant in Wisconsin than in Sicily, but Detroit's example should have been an Auto 101 for everyone.
Back in 2008, most Europeans I talked to believed the crisis was simply an issue of "American mismanagement." Their simplistic view: If Detroit built better cars, problems would vanish.
European companies didn't make the tough decisions. Capacity wasn't reduced. And now the storm clouds are brewing.
Dealers can't finance their inventory, and in Spain they can't even get out of their business. Commercial real estate values are down 75 percent from just two years ago.
Discounts are deepening. Transaction prices are sinking.
Tavares just shakes his head and hangs on.
You can reach Jason Stein at email@example.com. -- Follow Jason on