Report: What will happen to automakers if the Euro zone implodes?

Filed under: Car Buying, Europe, Government/Legal, Earnings/Financials

Figuring out post-doomsday scenarios can make for hours of fun, but short of a cinematic "Kill them all!" they're rarely that accurate. That's because we never know which entrance doomsday is going to use, and the big doomsday is often followed by little doomsdays (as this year's Japanese earthquake/tsunami/nuclear meltdown should have taught us yet again). Still, that hasn't stopped Automotive News from taking a look at what might happen to European carmakers in case Italy, Spain and Greece leave the euro zone.

One scenario sees the German automakers suffering but Italy's Fiat faring slightly better. A strong euro, or if the zone completely implodes, an even stronger German Deutsche Mark would cripple the export earnings of Volkswagen, BMW and Mercedes-Benz by double digits. Conversely, a weak Italian lira that could be further devalued and printed at will might make Fiat more competitive against its northern rivals. Or maybe Fiat wouldn't do so well, since consumers would be practically allergic to major purchases, and the already soft demand in Southern Europe might crater such that "There might not be an Italian-made Panda."

In Europe, the prediction is that there would be no winners, not even Spain's Seat, which, like Italy's Fiat, might benefit from currency devaluation. The brands with a chance of reaping some benefit: Hyundai, Kia, and Toyota, whose industrial economies are safely distant from the economic fallout. From a purely industrial standpoint, that's reasonable - but if Europeans are scared to buy Fiats and no one knows what currencies are really worth from week to week, we suspect there will be plenty of pain to go around for everyone.

What will happen to automakers if the Euro zone implodes? originally appeared on Autoblog on Fri, 30 Dec 2011 18:29:00 EST. Please see our terms for use of feeds.

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Source: http://www.autoblog.com/2011/12/30/what-will-happen-to-automakers-if-the-euro-zone-implodes/

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