UK car manufactures have been hit by a weakening demand in
Europe. Despite this, shares in Volkswagen have increased and the
company remains on track to match its 2011 operating income. In
contrast, Ford has announced the closure of two UK plants. Raising
the question: What are they doing differently?
On Wednesday, 24 October, Volkswagen shares climbed by 3.7 per
cent whilst many of its competitors' saw a fall. Volkswagen has
largely shrugged off the European slump by relying on growth in the
US and China.
By leveraging strong sales in these markets Volkswagen has been
able to offer cut-price deals in Europe, helping it to gain market
share in its home region.
Although profits did fall during Q3 the German group is still on
track to meet its 2012 goals. It aims to beat the previous year's
sale revenue of 159.3 billion Euros and match 2011 operating
profits of 11.3 billion Euros.
Group Board Member for Sales, Christian Klingler, said, "Our
worldwide deliveries grew further in September with a particularly
strong performance in Central and Eastern Europe, North America and
the Asia-Pacific region.
"However, the present uncertain situation in the eurozone
and current overall market conditions require close monitoring and
will be receiving our full attention in the fourth quarter as
In comparison Ford revealed plans to close two UK plants next
year. The news came a day after Ford said it had started
consultations on closing its factory in Genk, Belgium.
Stephen Odell, Ford's chairman, said that the changes reflected
the economic and business conditions. He added "We've seen a
dramatic decline in the economic situation and indeed the
automotive industry as a whole."
In terms of vehicle numbers the company is running a fleet
around 14 million a year in Western Europe, 20 per cent below the
numbers in 2007.
It seems as though the car manufacturers that are placed
to take advantage of emerging markets are the ones that are able to
weather the European crisis.
Paul Everitt, Chief Executive of the Society of Motor
Manufacturers and Traders (SMMT), said. "The decline in
European vehicle markets and the uncertain future growth prospects
has resulted in a number of vehicle manufacturers restructuring
"These are difficult times for the European automotive
industry as manufacturers adapt to new market conditions and
changing patterns of global demand."
Suppliers to car manufacturers should regularly review customers
and their credit limit. As the future of the European market
remains uncertain being vigilant with credit control procedures is
even more important.