GENEVA - The prospects for Europe's ailing car market have got worse in recent months and demand is likely to remain shaky for at least five years as governments push through austerity measures to cut their debts, industry leaders warned.
Speaking at the Geneva car show on Tuesday, executives from Ford and Fiat to Daimler and PSA Peugeot Citroen bemoaned a market where, in some countries, sales of new cars are lower than at any time since the 1970s.
However, they also hailed a recovery in U.S. demand as well as robust growth in Asia, and were keen to show off new, higher-margin models - like Fiat's Alfa Romeo 4C two-seater sports car and Ford's EcoSport mini sports utility vehicle (SUV) - which they hope will tap strong global demand for high-end cars.
"The European market is not in a condition we expected three months ago," Dieter Zetsche, chief executive of German luxury carmaker Daimler, told journalists in comments typical of many.
New cars sales in the 27-member European Union dropped 8.2 percent to a 17-year low in 2012, as consumer incomes were squeezed by rising prices, subdued wages and austerity measures, and hopes of a recovery this year have so far proved elusive.
New car registrations in Germany, previously a bastion of stability, slumped more than 10 percent in February, and fell by around 12 percent and 17 percent in France and Italy respectively.
Stephen Odell, head of Ford's European business, forecast the European car market would continue "running along the bottom" of the U.S. carmaker's forecasts in the first half of this year, and had little confidence in a quick recovery.
"Frankly, who knows what happens in the second half," he said, adding it could take four or five years for European sales to recover to the 17-million to 18-million-vehicle range seen in 2007, before the global financial crisis.
German premium car maker BMW similarly warned of a long haul to recovery.
"We believe that the underlying problem in Europe, which is mainly about debt, will persist for at least five more years," chief executive Norbert Reithofer said.
TIME TO CUT FORECASTS?
Morgan Stanley analysts on Tuesday cut their forecast for EU car demand this year to a decline of 6 percent from a drop of 4 percent previously, warning that weakness in southern European markets like Spain and Italy was spreading northwards.
That prediction came as business surveys showed France, Spain and Italy dragging the euro zone into a deeper downturn in February.
Duncan Aldred, the sales chief of General Motors' Opel brand, predicted on Monday European car sales could drop as much as 10 percent this year.
However, other executives remained reluctant to cut their estimates so early in the year.
French car maker PSA Peugeot Citroen, for example, said it was sticking to its view the European market would contract between 3 percent and 5 percent this year.
Fiat also said it would keep its forecasts, though chief executive Sergio Marchionne sounded downbeat.
"I don't see any glimmer of hope (for a European market recovery) this year," he said.
Fiat, like many rivals, is pinning its hopes on the premium end of the market, which is seeing strong growth globally.
The Italian car maker said it would start selling its Alfa Romeo 4C two-seater model in Europe at the end of September with a launch price of 60,000 euros ($78,000) in a bid to stoke interest in the upmarket brand. A U.S. launch would follow shortly afterwards, it added.
Ford aims to bring its EcoSport compact SUV to Europe later this year, while BMW said it was optimistic that demand for premium cars from the United States and particularly China would continue to outweigh weakness in Europe.
"We're cautiously optimistic for this year," CEO Reithofer said, forecasting a 2 percent rise in the U.S. market and 8.5 percent growth in China, compared with a 2 percent drop in Europe.