Auto recovery will take longer in Europe than U.S., Visteon CEO says
Visteon CEO Tim Leuliette: "It typically is a multi-year payback to address restructuring in Europe."
DETROIT (Reuters) -- The auto industry's turnaround efforts will take longer to gain traction in Europe than in the United States, where some companies were able to see the fruits of their plans within a year, Visteon Corp. CEO Tim Leuliette said Thursday.
The longer time frame partly stems from the fact that the severance pay required to lay off workers in some areas of Europe is higher than in the United States, Leuliette told Reuters.
Furthermore, companies have struggled to keep pace with the sharp, rapid deterioration in the economy as austerity measures and unemployment have hurt consumer spending.
"Everyone's trying to pin a tail on the donkey, but the donkey does move," Leuliette said, after the auto parts maker reported fourth-quarter earnings Thursday.
Europe is Visteon's second-largest source of revenue. Last year, Visteon said it would make cuts in Europe and close plants around the world to cope with slowing demand.
In January, new vehicle registrations in Europe fell to 918,280, the slowest January since its records began in 1990, the Association of European Automakers said.
"As Europe continues to contract, you have to always be cognizant of making sure you have the right assets and the right employment base in line with that reality," Leuliette said.
He added: "It typically is a multi-year payback to address restructuring in Europe."
Interiors a top priority
Visteon, once the parts-making unit of Ford Motor Co., reported a fourth-quarter net income of $39 million or 74 cents a share, reversing a loss of $26 million or 51 cents per share a year earlier.
Revenue during the quarter grew to $1.82 billion from $1.73 billion during the same quarter a year ago.
For all of 2012, Visteon said it posted $100 million in net income, up from $80 million in 2011. The company posted revenue of $6.86 billion for the year, down from $7.53 billion in 2011.
Leuliette, who has been Visteon CEO since September, is in the midst of revamping the company in response to concerns from investors and directors that its presence in too many businesses is hurting its market value.
One of Leuliette's top priorities in 2013 is to divest the company's interiors business. He declined to discuss the sale process, but said many companies and strategic investors are exploring potential deals in the auto parts business.
"There's a whole group of people who believe Europe is the U.S. of '09 and '10 and are buying assets now or looking at assets now because the price is right," he said.
"There are other people who see segments of the industry that still need consolidation," he added.Contact Automotive News