By David Eldridge, European Plastics News
Tough conditions in the European car market have so far had a limited impact on the financial results of large injection moulding companies supplying the automotive sector, but there are worrying signs about production declines at some carmakers.
New passenger car registrations in the EU in the January-June 2012 period fell 6.8 percent year-on-year to 7.131 million, according to figures from ACEA, the European car makers association. This represents a decline of nearly half a million cars compared with the first half of 2011. There was a 0.7 percent increase in car registrations in Germany and a 2.7 percent increase in the UK, but other major markets were depressed in the first six months of this year. In France and Italy, registrations dropped by 14.4 percent and 19.7 percent respectively.
In spite of this, global sales at Tier One automotive supplier Faurecia have continued to rise. The group reported total sales in the first half of 2012 rose by 7.5 percent to Euro 8.77 billion. Faurecia's current success, though, is coming from outside Europe where sales increased 29 percent and now account for 41 percent of its product sales.
Faurecia said: "The contrasting nature of automobile production should continue in the second half, with Europe's automobile production maintaining its downward trend compared with 2011, and other regions maintaining their growth."
Growth in other regions gave Faurecia the confidence to lift its forecast for total sales in 2012 to between Euro 17-17.4 billion.
Among other Tier One suppliers, Johnson Controls (JCI) reported a 2 percent increase in total sales to $10.58 billion in the three months to 30 June. Stephen Roell, JCI's chairman and CEO, said: "As we look forward to the next several months, we expect continued softness in our markets and industries. We will continue to take appropriate action to adjust as market conditions warrant."
Expansion outside western Europe is a strategy that is also working in the next tier of automotive injection moulders.
Grammer said its revenue in the first half of 2012 rose 6.7 percent to Euro 573.4 millon. The group said its interiors moulding business supplies the premium car segment and the strength of sales by its German customers to China and the US compensated for weaker markets in Europe.
The resilience of large European automotive moulders shown in their financial results demonstrates the success of their globalisation strategies. But this leads to the question: will they need to cut production capacity on their home turf in western Europe if the market continues to be depressed?
When asked this question, Faurecia answered that it does not comment on its business activity outside of its regular results and sales announcements. Plastic Omnium had not replied to European Plastics News on this issue at the time of writing.
But pressure appears to be growing on the European operations of automotive moulders. A number of carmakers, including PSA/Peugeot-Citroen, Fiat, Renault and General Motors, have imposed temporary shutdowns at assembly plants to avoid a build-up in stocks of unsold cars.
These developments may not impact all automotive suppliers. Moulders serving customers in higher value segments may fare better, as a characteristic of the current market is that premium car sales have not fallen.
This article first appeared on our sister publication, European Plastics News