Hyundai, Ceva Add to Gloomy European Autos Outlook (Update1)
March 08, 2010, 11:13 AM EST(Adds sales predictions at Renault, Peugeot and Fiat in ninth paragraph.)
By Andreas Cremer and Steve Rothwell
March 8 (Bloomberg) -- Hyundai Motor Co. said its German sales may tumble 38 percent this year and Netherlands-based Ceva Group Plc, the largest car-parts transporter, said shipments suggest there won’t be a strong rebound in the European economy.
Hyundai, South Korea’s largest automaker, is braced for sales in Germany as low as 56,000 in 2010 compared with 91,000 a year earlier, according to Werner Frey, managing director for the country. Clients of Ceva, which include Volkswagen AG and Fiat SpA, are generally predicting “very low single digit” percentage growth, Chief Executive Officer John Pattullo said.
The forecasts add to gloom surrounding European auto markets after Deutsche Bank AG last week cut its estimate for full-year sales by 100,000 units to 12.1 million. A 10 percent gain in the first two months was propelled by orders under cash- for-clunkers programs and demand is likely to drop 14 percent in the remaining 10 months as incentives end, the bank said.
“I’m still not bullish,” Ceva CEO Pattullo said in a telephone interview. “It will be pretty buoyant in a number of developing economies, particularly China, but I think in developed economies such as Europe and North America it will be a very slow and steady recovery.”
West European car sales rose 0.5 percent to 13.6 million last year, according to figures from the Brussels-based European Automobile Manufacturers’ Association. Deutsche Bank envisages an 11 percent drop in the region for the whole of 2010.
“There is a high probability that February was the last month with positive year-on-year growth,” analysts including Gaetan Toulemonde said in a research note on March 5.
German Shrinkage
In Germany, deliveries of cars and SUVs may fall to about 3 million this year from 3.8 million in 2009 after scrapping payments ceased last September, Hyundai’s Frey said in an interview in Berlin on March 5.
“We’re committed to further growth, but 2010 will be difficult for us after trade-in incentives expired,” he said.
Renault SA reported its first annual loss in 13 years on Feb. 11 and forecast a 10 percent contraction in European auto demand in 2010. PSA Peugeot Citroen predicted a 9 percent drop a day earlier and Fiat said Jan. 25 that West European sales could fall 16 percent if incentives aren’t revived.
Market Share
Seoul-based Hyundai aims to keep its share of registrations in Europe’s largest economy above 2 percent this year, compared with 2.4 percent in 2009, the executive said. Sales should increase about 10 percent to 100,000 by 2015, boosting its market share to 3 percent, he said.
Ceva, based in Hoofddorp, west of Amsterdam, had a net loss of 104 million euros ($142 million) in 2009 as revenue fell 13 percent to 5.5 billion euros. Earnings began to revive in the second quarter of last year, when the company posted an operating profit of 69 million euros, compared with a 30 million-euro loss in the previous three months, Pattullo said.
Contracts won by the Dutch company in 2009 included logistics services for the Iveco trucks unit of Turin, Italy- based Fiat, Ceva’s biggest auto-industry client, and for Office Depot Inc., the second-largest office-supplies retailer in the U.S., the executive said in the interview on March 4.
“What’s important for us now is to try and get to the next level and move our business from the stable trading conditions that we are currently in to a higher level,” he said.
Ceva, the biggest global logistics specialist following its sale by TNT NV to private-equity firm Apollo Management LP in 2006, has accelerated the implementation of the “kaizen” efficiency and cost-reduction system, training 1,800 supervisors last year in the methodology best known for its application at Toyota Motor Corp.
“This industry generally does not have a good reputation for operational performance,” Pattullo said. “We’ll be able to compare sites across the world, we’ll be able to tell customers how good the operations are and we’ll just bring a bit more science to logistics.”
--Editors: Chris Jasper, David Risser.
To contact the reporters on this story: Steve Rothwell in London at srothwell@bloomberg.net; Andreas Cremer in Berlin at acremer@bloomberg.net.
To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net
