I spent Wednesday evening in the company of European auto industry CEOs at a dinner hosted by Automotive News. Lots of talk about the EVs being featured at the show, but what struck me was the backstory.
As in the US, European car companies have generally adjusted to the downturn. But the outlook here for the fourth quarter and next year was decidedly somber. Most seem to be bracing for a further market downturn. (In the US the general assumption is that sales are headed up.) The Europeans are still dealing with the aftershocks of their own versions of Cash 4 Clunkers. But what is really behind the gloom falls under the banner of austerity programs. In the US, most people are concerned about the deficit, but truthfully, it is an abstraction. The market for US Treasuries is strong. In the short term, the deficit has few tangible consequences. After the Greek debt crisis, European governments are taking deficit reduction seriously. Hoping that growth will return and ease deficit pressures doesn't seem an option. Hence the austerity programs. No one really knows the effect these programs will have on economic performance or vehicle sales, but the assumption is that it won't be good. I need to ponder more on how this will play out in the US, but it seems clear we are not out of the woods yet.