Later this week European car manufacturers will begin announcing their financial results for the first quarter and Fiat, Chrysler’s Italian owner, looks like being a notable sufferer from the economic crisis.
Peugeot-Citroen of France, GM’s new alliance partner, is also likely to have gone backwards in the first quarter, but along with its compatriot Renault, it only announces sales every three months. Profit and loss details are revealed half yearly.
Investment bank Credit Suisse reckons Fiat will lose at least $93 million in the first quarter. Ominously, net debt is expected to rise to about $8.1 billion from $7.2 billion at the end of 2011. As Fiat’s sales dropped eleven per cent, Chrysler’s rose more than 30 per cent, and Credit Suisse expects earnings before interest and tax (EBIT) of $793 million to more than make up for Fiat’s red ink. Fiat-Chrysler results are due April 26.
European market leader Volkswagen and its Audi subsidiary will announce “solid” EBIT of almost $4 billion, despite European sales softness and weak pricing, according to Commerzbank, as manufacturers were forced to offer discounts to move the metal. VW reports on April 26 too.
European conditions are so poor, even some German luxury car manufacturers are coming under pressure.
“Premium is not immune,” said Credit Suisse, “and pricing for premium vehicles is under more pressure, even in the less exposed German market.”
Mercedes-Benz will see its profits appear weaker than BMW and Audi’s, Credit Suisse said.
Mercedes-Benz will see its profit margins slip to 8.3 per cent in the quarter from 9.3 per cent in the same period of 2011, according to Commerzbank. Mercedes reports April 27.
BMW will report its earnings on May 3, and Credit Suisse thinks because of strong sales and an impressive order book, it might upgrade its profit forecast for 2012 from the current eight to 10 per cent range to at least 10 per cent.