U.S. auto industry executives are wise to keep a close eye on the economic and financial turmoil in Europe, but this is no time to panic.
Automakers with European subsidiaries are feeling the effects of soft consumer demand in some markets. As a result, some European automotive operations face mounting losses.
Worse, the global relationship among banks means that if Greece, Italy or another eurozone country were to default on its debt, there likely would be an international financial collapse.
That scenario was on General Motors CEO Dan Akerson's mind last week when he spoke at the Detroit Economic Club. He said the global fallout of the debt crisis in Europe could be worse than the recession that clobbered the U.S. economy starting in 2008.
Akerson said GM cannot afford to carry a chronically unprofitable Opel unit, which may need further restructuring. He said GM, which collapsed into bankruptcy and a U.S. government-run restructuring the last time around, is taking steps to reduce its exposure.
GM isn't alone. A recent survey of automotive executives conducted by the consulting firm KPMG found that industry leaders are less optimistic than they were just four months ago and have tempered their plans to increase hiring and capital expenditures. But 50 percent of the executives surveyed said they still plan to add employees next year, and 62 percent said they expect to increase capital spending in 2012.
That's because the U.S. market is holding up quite nicely -- so far. Although the U.S. economy is still stuck in first gear, the auto industry is humming along. Retailers report that November new-vehicle sales are strong. Pent-up demand is pushing customers into dealerships to replace aging vehicles. New fuel-efficient models are piquing consumers' interest.
Unless global economies implode, the U.S. auto market should keep on rolling.