CSM Worldwide Forecasts Adjustment Followed by Growth For European Automotive Market

DETROIT, Feb. 14 -- The CSM Insider Series continued this morning at the Hotel Baronette in Novi, Michigan, where CSM Worldwide presented their European Production Outlook to an audience of OEM and supplier customers. Presentations included a European economic overview by CSM Chief Economist Bob Fish, and a European light vehicle production outlook by Mark Fulthorpe, manager of CSM European Forecast Services.

Key conclusions of today's presentations:

2002 will be a time of adjustment as sales and production mildly slow, and overcapacity is addressed, particularly at GM Europe and Fiat. The long-term vehicle production outlook is expected to recover and grow to 20 million units by 2005 as demand rises and Japanese manufacturers increase European capacity and growth is found in luxury/near-luxury exports. The next five years will see further declines in the unemployment rate, possibly to 6 percent from the current 8.5 percent. Workers will also be better paid through expected productivity improvements. More workers and better-paid workers form an appealing base of consumers for new vehicle sales. The European Commission is adamant in taking on vested industrial interests in order to promote a more competitive, consumer-friendly European economy. The automotive industry is their first target. Compared to 2001 results, new vehicle sales will drop by 3 percent in Western Europe, but sales volume could exhibit upside potential due to cuts in interest rates, the robust health of European consumers and intense competition. The danger for auto businesses lies with new vehicle prices, which will again fall this year. Auto manufacturers and suppliers must aggressively continue to develop and sustain product differentiation or cost minimization strategies to enhance profitability. The benefits of flexible labor markets and the EMU (Economic & Monetary Union) have greatly contributed to the impressive surge in West European auto sales. These economic structure shifts will set the stage for further sales gains. Brand values are likely to be more widely promoted as premium marques such as BMW and Mercedes-Benz (including Smart) continue to look strategically downmarket. Some high-volume automakers will have the capacity to take the challenge upmarket, such as VW through Audi and Ford through the Premier Automotive Group. Other high-volume makers need to find ways to address this in the long term. More detailed information on the European production outlook is available from CSM Worldwide. Contact Michael Robinet at CSM Worldwide by calling 248-380-9000, or email michaelrobinet@csmauto.com.

CSM Worldwide supports more than 250 automotive suppliers with global market intelligence and forecasting services. With corporate offices in Detroit, CSM Worldwide covers the global automotive environment from London, Brussels, Prague, Sao Paulo, Tokyo, Beijing, Shanghai and New Delhi.