GM chief: Strong euro is damaging car industry

[douglask]

One of Europe's top executives called yesterday for political action to tackle the damage being done to the car industry by the overvalued euro.

Carl-Peter Forster, president of General Motors Europe, said the disadvantage European car manufacturers were suffering because of the high value of the euro against Far East currencies such as the yen and the Korean won had been underestimated by governments within the eurozone.

He estimated that the currency difference gave Japanese car makers such as Toyota, Nissan and Honda a 3,000 to 4,000 advantage over their European rivals on each model sold.

"It is not understood how big a contribution this makes to our lack of competitiveness," said Mr Forster. "We have to fight that and it is something our politicians should really deal with. It is not something you can leave to the free market."

GM's European operations returned to the black last year for the first time since 1999, making an operating profit of $227m (£116m). In the previous six years, GM lost $3bn, resulting in a restructuring programme which cost 13,000 jobs. But Mr Forster warned that more cuts, possibly including plant closures, may be necessary to maintain GM's recovery.

GM's Vauxhall car plant at Ellesmere Port on Merseyside is pinning its survival hopes on being selected as one of the locations for production of the new Astra model. Jonathan Browning, the chairman of Vauxhall and GM Europe's vice president of sales and marketing, said it was possible that a decision would be taken in the second quarter about where the new Astra will be built, although it could slip to later in the year. He added that GM had no plans to scrap the Vauxhall brand in the UK.

Mr Forster declined to give a guarantee for any of the European plants which currently produce the Astra but said a closure of one of them was an " extreme solution". The Merseyside plant accounts for about one-fifth of Astra production in Europe but its output went down last year after the third shift at the plant was axed.

Mr Forster said part of the group's future strategy would be to build several different models from its various brands on a single production line. Opel's Russelsheim plant in Germany will start building the Saab 9-5 next year and there is also a possibility of Chevrolets being built in Western Europe.

Mr Forster criticised the "arbitrary" target set by the European Commission of cutting carbon emissions from cars to 120 grams per kilometre by 2012 - 26 per cent below the level achieved in 2005. But he stressed GM's commitment to producing more environmentally friendly vehicles using hybrid, fuel-cell and bio-fuel technology and called for more European governments to follow the example of Sweden, where big tax breaks are available on the purchase of ethanol-powered cars.

Original article:

http://www.belfasttelegraph.co.uk/business...icle2406419.ece

[FUTURE_OF_GM]

Looks like Japan Inc. has eveyone snowed.

[GXT]

Well it is the same people whining. All I ever hear from BWM and Mercedes is how the cheap Yen is unfair. :AH-HA_wink:

Here's a thought for you. US automakers and their economists are calling for a 25-30% increase in the valuation of the Yen.

http://www.autospectator.com/modules/news/...hp?storyid=8759

The US dollar is approximately that far behind the Euro. Why doesn't GM make more cars in the US (instead of laying off US workers) and sell them in Europe?

[aaaantoine]

I've heard the European makes complain that the Euro is stronger than the Dollar. Granted, it was once. And it was about a year ago.

[Northstar]

Well it is the same people whining. All I ever hear from BWM and Mercedes is how the cheap Yen is unfair. :AH-HA_wink:

Here's a thought for you. US automakers and their economists are calling for a 25-30% increase in the valuation of the Yen.

http://www.autospectator.com/modules/news/...hp?storyid=8759

The US dollar is approximately that far behind the Euro. Why doesn't GM make more cars in the US (instead of laying off US workers) and sell them in Europe?

Because then they would have tons of plants in Europe sitting idle, not to mention the billions of dollars it would probably take to tool US plants for all of the existing cars in Europe.

[FAPTurbo]

Well it is the same people whining. All I ever hear from BWM and Mercedes is how the cheap Yen is unfair. :AH-HA_wink:

Here's a thought for you. US automakers and their economists are calling for a 25-30% increase in the valuation of the Yen.

http://www.autospectator.com/modules/news/...hp?storyid=8759

The US dollar is approximately that far behind the Euro. Why doesn't GM make more cars in the US (instead of laying off US workers) and sell them in Europe?

Well, the Euro's would likely snub their noses at a Opel built in Delaware. Hell, their auto rags would spin it as a Saturn rebadged as an Opel.

They're European... what can you do?

[ellives]

I've heard the European makes complain that the Euro is stronger than the Dollar. Granted, it was once. And it was about a year ago.

I don't follow the Euro closely but I *do* know the UK pound (sterling) is now 2x the US dollar. Not sure what's driving this but I haven't seen anything about the UK that would justify it.

[Mr.Krinkle]

The UK Pound has always been strong about 1.5 ~1.7x the US Dollar. In this instance it might just be an indicator of the declining value of the dollar.

Edited April 3, 2007 by Mr.Krinkle

[CARBIZ]

In view of the astronomical current account deficit that the U.S. is running monthly, it is absolutely shocking that the Yen would be cheaper. The Pound has been a relatively stable currency for a couple decades. The Euro may look good compared to the dollar right now, but against all of these currencies it is clear the Yen has been manipulated. I think continental Europe is in trouble, although their infrastructure looks good, there are some storm clouds gathering.

I look beyond the car business and am concerned about a lot of internal and external political issues that are going to greatly challenge both the U.S./Canada and Europe in the coming seveal years.

[trinacriabob]

Un-friggin'-believable!

I looked up the exchange rate and the Euro is sitting at 1.33 x the US dollar. That means that the 100 Euro plane ticket which used to mean you'd pony up about $105 now means you will part with $ 133. When that multiplies through everything you touch on your European vacation, it gets ugly.

SH1T!

[Member55]

European manufacturers didn't complain a few years ago when they were making a killing in the US due to the strong US dollar.

[FAPTurbo]

Un-friggin'-believable!

I looked up the exchange rate and the Euro is sitting at 1.33 x the US dollar. That means that the 100 Euro plane ticket which used to mean you'd pony up about $105 now means you will part with $ 133. When that multiplies through everything you touch on your European vacation, it gets ugly.

SH1T!

Consider vacationing in Canada!

[JT64]

The Euro is 53% stronger than it was in 2000.

http://www.forecasts.org/data/data/EXUSEU.htm

So if they used to sell a Passat for $20,000 USD in 2000, now they need to sell it for $30,588 USD.

No wonder a Passat costs as much as a CTS, and a Jetta as much as an Aura.

Poor Europeans. We're sorry we're taking your jobs and hiring 1.53 Americans to replace each one of you.

Perhaps BMW, Mercedes, and Audi should consider building their 3-series, C-class, and A4 in the USA.

The USD:yen has been pretty average on the other hand, $1 USD = 117 yen, which is about average (100yen - 145 yen range).

Edited April 4, 2007 by JT64

[RJB]

Just watch, I bet we will have the Euro as our currency in the future.

[Teh Ricer Civic!]

Just watch, I bet we will have the Euro as our currency in the future.

that would imply America would join the EU.

[mustang84]

Un-friggin'-believable!

I looked up the exchange rate and the Euro is sitting at 1.33 x the US dollar. That means that the 100 Euro plane ticket which used to mean you'd pony up about $105 now means you will part with $ 133. When that multiplies through everything you touch on your European vacation, it gets ugly.

SH1T!

Yep, it's all too real to me...for a while the Euro was at 1.39 vs. the dollar. So when I buy a 1/2 litre of Coke that costs 2 Euro, I'm actually spending about $2.70. Yikes!

[GXT]

Because then they would have tons of plants in Europe sitting idle, not to mention the billions of dollars it would probably take to tool US plants for all of the existing cars in Europe.

For each idle European worker they would have one less idle American worker. They may as well show some allegiance to the USA.

As for the $ to retool, it wouldn't be cheap (not as cheap as just whining and lobbying, that is for sure). But if they made the magical $2,000 - $3,000 profit/vehicle by building in the US, they could theoretically make an extra $4B - $6B in profit per year based on their 2006 European volume. That pays for a lot of retooling... especially when you already have plants that are idled.

Not only would they be able to take advantage of the USD/Euro "advantage" they would also be able to make their "higher-quality" small cars more easily available for sale in the US.

If the Japanese are making such a profit off of this, then why doesn't GM stop whining and start doing it as well?

[GXT]

The Euro is 53% stronger than it was in 2000.

http://www.forecasts.org/data/data/EXUSEU.htm

So if they used to sell a Passat for $20,000 USD in 2000, now they need to sell it for $30,588 USD.

Yes, but since the Euro has more buying power their costs to produce will be much less as well.

No wonder a Passat costs as much as a CTS, and a Jetta as much as an Aura.

There are other reasons for that. You get that quality German-Need-Servicing-Monthly-Engineering.

[Dragon]

that would imply America would join the EU.

no it wouldn't. anybody can use anybody's money as their currency. they just don't' have any control over it.