Why Cyprus Will Push Europe’s Carmakers To The Brink

• Losses mount as European car sales plunge; major brands in peril
• A ‘smaller’ European car industry inevitable by 2014

It's not the first time that matters in tiny Cyprus have had all Europe on a knife-edge. But this time at least the struggling Cypriot has the moral argument on his side.

And he, or she, may well ask why they should 'carry the can' for a banking sector made mortally ill by its own institutionalised greed, profligacy, poor judgment, poorer accounting and plain shonky dealing.

However, carry the can they will. The choice: to allow a plunder of larger deposits, among other pains, or total economic collapse.

For the full year, across all European Union countries, 14,357,808 new cars were sold in 2009, down just 0.7 percent on 2008 (thanks, in the main, to panicked scrappage schemes).

In 2012, new vehicle sales across Europe totalled 12,573,842. (Source JATO Dynamics)

Now have a look at the top ten brands in Europe at year’s end 2012, and consider the growing pool of red ink on so many of those company ledgers:

Top 10 Brands 2012

And if last year was bad, this year is dire: an annus horribilis in prospect for Europe’s carmakers.

Unfortunately, there are no rabbits left in any hats.

Each month the troubles drag on in the European economy, and with recession becoming an embedded fact of life across so many jurisdictions, then European carmakers face an inevitable reckoning of the type US carmakers faced in North America.

As casualties go, Saab is looking like a minnow. Short of a miracle, there’s at least one major train wreck in waiting among Europe’s troubled car makers.

Another Cyprus – or a galloping crisis of confidence in the banks and the safety of deposits – and more may be in peril.

Too many car companies, too many plants, too many Cypruses.

Tim O’Brien
TMR Managing Editor