In Europe: Time to get together and get tough
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If political leaders in Europe can't agree on ways to cooperate, they should at least find common ground on this: If there is a bottom to the financial mess, it has yet to be reached.
That's bad news for everyone, including car companies and their suppliers that are based in North America.
As we have learned since the beginning of the economic calamity in North America four years ago, the world is an intertwined mix of large car programs, complex automaker-supplier relationships and economic relationships that know no boundaries.
The lesson for today's state of Europe: When the going gets tough, get even tougher.
The European auto market continues to wither. In September, vehicle sales rose in Turkey and the United Kingdom but declined in Germany, Italy, Spain and France. In Germany, the region's biggest market and one that had been immune from much of the economic upheaval, registrations last month fell 11 percent from a year earlier.
Some automotive leaders saw it coming. Chrysler-Fiat CEO Sergio Marchionne warned as early as the summer of 2011 that European carmakers had not acted with enough speed or decisiveness in reducing their production footprint.
Austerity programs, combined with political and nationalistic policies, have created a calamity for the European auto industry. As inventories balloon, discounts deepen and transaction prices compete in a race to the bottom, it's obvious that Europe hasn't learned the lessons taught in North America.
European workers and their automaker partners, most likely with support from governments, must search for a solution. In some places, that realism is taking shape. In other markets, the gulf between fiscal responsibility and traditional operating modes is widening.
One solution would be to do what Marchionne suggested at the Paris auto show last month. Marchionne, currently serving as chairman of the European car lobby ACEA, has been urging his European counterparts to come up with a plan to cut overcapacity in the region. Acting as a group, Marchionne has argued, automotive companies in the region can survive what appears to be an endless spiral of financial disparity.
His suggestion has been resisted by Volkswagen and other German carmakers. And during the Paris show, Marchionne and VW CFO Hans Dieter Poetsch traded barbs in the press.
The European industry must not disintegrate into factions.
Europe can learn lessons from the North American restructuring in which labor, carmakers, suppliers and governments found a way to forge a positive solution.
As Renault-Nissan COO Carlos Tavares said in Paris: "We can't see the beginning of the beginning of a rebound."
Realism and cooperation would be a fresh start.
