CSM Worldwide Forecasts European Production Rebound in 2004, With Incentives to Play a Wild Card Role

FARMINGTON HILLS, Mich., March 1 -- At their annual client briefing on the European automotive market, CSM Worldwide predicted European production levels will rebound in 2004, moving beyond 19.5 million units. The production increase will be supported by new or revised volume offerings at Volkswagen, Ford and General Motors. While the strength of the Euro will threaten to blunt the export potential of premium sedans and Europe's burgeoning SUV production, an increase in vehicle incentive packages in Europe remains a wild card in how the European market will evolve.

General Motors will bring their incentive dollars to Europe to back the Opel Astra in its fight to gain market share within the European market, similar to what is commonplace in North America. Volkswagen is ready to fight back with consumer incentives on the new Golf, a move unheard of in the past for a vehicle so close to production launch. Volkswagen currently offers incentives on the Lupo and Polo models.

General Motors and Volkswagen are moving into uncharted waters, potentially going head to head and matching each other Euro for Euro. Incentives in this form are new to the European consumer, who is used to a more subtle approach. CSM pointed out that the European market consists of two main groups of automakers: the old national champions like Fiat, Renault/Nissan, Volkswagen and PSA, who are currently defending their declining market share against the other manufacturers, Toyota, DaimlerChrysler and BMW, who are looking to rapidly increase their product portfolio. The introduction of aggressive incentives to the European market could have a dramatic impact.

Amongst the old guard, Ford and Fiat are unlikely to have the war chest to support escalating price wars, while PSA and Renault will also be increasingly exposed. Unlike in North America, the emerging mass-market brands, like Toyota and Nissan, may have to join the incentives game in order to gain European market share.

The impact of an aggressive incentive war in the Western European market would certainly be a welcome boost to sales volumes, which are being hampered by the painfully slow economic recovery within the region. Though the current recovery in Western Europe looks sustainable, the structural problems in the major Euro Area markets are preventing more dynamic economic growth.

CSM Worldwide (www.csmauto.com ) supports more than 350 of the world's top automakers, suppliers and financial organizations with market intelligence and forecasting services. With corporate offices in Detroit, CSM Worldwide covers the global automotive environment from London, Frankfurt, Tokyo, Sao Paulo, Singapore, Shanghai, Bangalore, and Budapest.