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European Car and Light Commercial Vehicle Production Outlook FOUNDATION EDITION January 2013 SMMT, the 'S' symbol and the ‘Driving the motor industry’ brandline are trademarks of SMMT Ltd Contents Introduction and analysis overviews: Individual vehicle manufacturer reviews: About this report 3 BMW 47 Summary 4 Daimler 54 Implications 12 Fiat (incl. Chrysler) 59 Overcapacity & Restructuring 15 Ford 65 Demand Side Perspective 20 GM 70 UK VM Summary 21 Honda 75 Production Outlook Overview 24 Hyundai-Kia 76 Country Rankings 36 PSA 79 Alternative Scenarios 39 Renault-Nissan-Dacia 85 Disclaimer 45 Suzuki 94 Tata – Jaguar Land Rover 95 Toyota 99 Volkswagen (incl. Porsche) 101 Volvo 109 Aston Martin 112 Mitsubishi 113 SAIC MG 113 Saab-Spyker 113 Other Chinese – Chery and Great Wall 114 EUROPEAN CAR AND LCV PRODUCTION OUTLOOK REPORT January 2013| Page 2 About this report This is the first 2013 Production Outlook report from AutoAnalysis. The next report will appear in March, followed by bi-monthly reports thereafter. The following reports in 2013 will be much shorter than this “Foundation” report and will focus on the detailed production numbers and specific changes at each VM since the previous report. The views and projections contained in this report are those of the author, Ian Henry of AutoAnalysis. They do not represent an official SMMT view. The projections regarding new model timings, changes in production locations and the associated production volumes shown here have been compiled on the basis of information from a variety of sources. In most cases, the vehicle companies do not provide official information on which models will be made at which plants, nor do they provide detailed information on future volumes and timings. They have been prepared on the basis of judgments made by AutoAnalysis, taking into account the information, opinion and inside from a range of industry, press and analyst sources available at the time of compiling this report. Ian Henry of AutoAnalysis will gladly address SMMT members’ specific questions on this report. Readers’ comments and questions on this report will be greatly appreciated. Please e-mail: [email protected]. EUROPEAN CAR AND LCV PRODUCTION OUTLOOK REPORT January 2013| Page 3 remain resolutely opposed to further support for weak economies, especially Summary Greece. Moreover, even German consumers are now feeling the pinch economically and are certainly not buying cars in the same numbers as in the Economic recovery still a long way off … European production recent past. and sales continue to decline Fortunately, although the manifold and deep-rooted economic problems in Following the 2008-9 economic and financial collapse, the global economy Greece, Portugal, Spain and other troubled economies have not been resolved, recovered somewhat in 2010 and in the early part of 2011, albeit in a very the much-feared contagion effect of these economies has not spread widely uncertain manner in many parts of the world. However, since then it has across Europe. And in early 2013, quite remarkably, a Greek government stuttered at best, especially in Europe where the picture is now rather worrying. bond auction was actually fully subscribed, such has been the perceived Recession looms large in many countries. Despite the hoped-for recovery, the improvements in the country’s finances. While the Greek economy is relatively UK may see only a marginal improvement in its economy at best and is still small and its problems are seen as “manageable”, of much greater concern is close to recession. And at the same time, severe financial problems continue the situation in Spain, or even Italy. Spanish unemployment is currently to afflict the Eurozone. In addition, while the US has temporarily managed to around 25% and in some age groups it is as high as 50%, hardly a recipe for avoid the immediate problems of the “fiscal cliff”, the automatic tax rises and social harmony. Economic indicators in Spain are very poor indeed. cuts in government spending (which would have occurred had there not been Production slowing … the interim agreement between the President and Congress which was finally sealed at the start of January 2013) have been averted for now, but without a Our provisional total for 2012 European production including Russia is permanent solution. 18.12mn, a fall of over 1mn from 2011. we see a modest rise as still likely in 2013, to 18.68mn, but this will be driven largely by growth in Russia. any The UK is sticking to its low interest rate policy, as is the rest of Europe; and growth in western Europe will be due to the premium brands from Germany, across the developed world, low interest rates remain the norm and are and JLR/Mini/Nissan in the UK and Hyundai-Kia, as well as LCVs from Ford. expected to remain in place for the foreseeable future. Conventional economic and financial theory suggests that a low interest rate environment should Taking Russia out of the equation, we provisionally have European production encourage companies to invest; however, there is little evidence that the low down at just under 17mn units, a fall of nearly 1.4mn units from 2011. the interest rate environment, allied to the UK’s recent quantitative easing, have modest rise in 2013, to 17.1mn, ie of not much more than 100,000 units will be, actually led any significant renewed dynamism in the economy. as noted above, largely due to the premium brands from Germany, and JLR/Mini/Nissan in the UK and Hyundai-Kia. Most of the traditional volume During 2012, the European Central Bank said it was thinking of cutting interest brands in Europe will fall in 2013, especially Fiat, Opel, Citroen and Peugeot. rates still further, but what happens when they get to zero has not been Renault and Ford will see continued falls in production for their main models explained. Moreover, although base rates are at all time lows, the real rates of but will be broadly stable overall owing to a couple of niche models coming on interest being paid by consumers and businesses alike are actually much, stream. much higher than the base rate, so the effectiveness or practical impact of cutting rates any further must be questioned. But in Investment in automotive production continues … Across Continental Europe, Germany excepted, severe problems remain In the light of all this poor economic news, it is remarkable how the unresolved. Even Germany, for all its financial strength, is feeling the pressure automotive industry has continued to invest in the UK and plan for the of being Europe’s saviour of last resort. Political pressures within Germany long term. equally, it is remarkable how UK vehicle sales have continued, with EUROPEAN CAR AND LCV PRODUCTION OUTLOOK REPORT January 2013| Page 4 the UK being the only growth market in Europe in 2012. Quite how UK In previous reports, in the light of the recent series of investments in UK car consumers are managing to fund these new car purchases is also unclear. manufacturing capacity, we asked whether, given the economic uncertainty in Europe as a whole, the automotive industry was bucking the trend in defiance In terms of UK manufacturing, the competitiveness of the Nissan plant – of economic reality?. Have other industries accepted the economic solution too evident in how it won several major investments in the past year – and the meekly or are they the realistic ones? Put another way, can the automotive global attraction of JLR’s UK designed and built vehicles have given the UK’s sector lead the economy out of its slough of despond and into recovery mode? automotive manufacturing sector a great deal of hope for the future. This is especially true for premium brands; in addition to the continued investment at Restructuring under way … finally JLR, the Mini brand goes from strength to strength; we have also seen Nissan decide to make the UK the production location for its first European-made The decisions in 2012, by GM, PSA and Ford to restructure and start to cut Infiniti, in place of the planned Nissan C-segment model. JLR’s strength and excess European manufacturing capacity over the next few years suggests success was also confirmed early in 2012 when it announced 800 new jobs at that the industry is beginning to face up to reality. These VMs are finally its Solihull plant, just a few days after Honda had announced 800 jobs would beginning to address their structural problems; at the same time, other volume go at its Swindon plant owing to declining sales in the mainstream markets in VMs, especially Fiat and Renault, are embarking on restructuring plans which seem to exclude plant closures. The job losses at Honda and the switch by which it operates. Vauxhall from a 5-day to a 4-day week are seen as necessary to “right-size” The strong export orientation of UK vehicle manufacturing insulates the UK these plants’ capacities on an interim basis while demand slows; but the automotive industry from specifically domestic economic problems to some companies remain committed to these factories in the long run. extent, although it is far from protected from international economic ups and downs, especially those in Europe. This is clear, not just in the decision by Rather than close any plants, Fiat intends to invest in its Italian operations, to Honda to cut the jobs referred to above, but also in Ford deciding to close its re-organise the production allocation between its four main Italian plants and re-focus its product line-up around its premium Alfa and Maserati brands and a Southampton plant and concentrate van production in Turkey.

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