Bye-bye Saab. The automaker's bankruptcy filing is almost certainly the end of the line. It renders shares in Swedish Automobile, which acquired Saab nearly two years ago, virtually worthless.
The surprising thing about the European auto industry, however, is how rarely an event like this happens. Since the 2008 financial crisis, just two auto plants have closed - Opel's in Antwerp and Fiat's in Sicily. The US is different: Detroit is a serial visitor to the bankruptcy courts. Yet it is the industry that refuses to die.
In fact, it may be on the brink of a modest revival. Despite getting billions in government aid and scrappage schemes, manufacturers have only trimmed capacity. Sure, there has been a shift to lower-cost production: Volkswagen announced plans to boost its operations in Slovakia, for instance, just as Saab was being shuttered. It is the sort of thing an industry does to avoid the more pressing need to consolidate.
Globally, industry forecasters like IHS Automotive and LMC Automotive predict that the market for cars and light trucks will expand by 4 to 5 per cent next year. Much of that is due to Asia, where cooling demand in China is unlikely to dent the overall trend. IHS believes that the region will see sales of 32 million units, or 40 per cent of the global total, up from 25 per cent in 2007.
North America, too, has come back strongly from 2008 and 2009, when sales slumped by more than 15 per cent and 20 per cent respectively. Helped by captive finance operations, sales are forecast to climb back to 16.4 million units next year. That remains below the 19 million-plus units sold annually in the early years of the last decade, but it constitutes a 30 per cent rise over the nadir of 2009.
The real problem remains in Europe, where demand has eroded from 16.8 million units in 2007 to a likely 14.4 million in 2011. It could slide another 5 per cent in 2012, says IHS. Rising price competition is one result. That is a sign of an industry suffering from chronic overcapacity. Don't be fooled by the forecasts. Saab may be a better guide to the next few years.
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