This week saw another set of awful figures on Europe's car market, now in its worst state for twenty years. New car sales in the European Union last month fell at an annualised rate of nearly 6%, to their lowest level for the month of May since 1993.
The news came after a brief glimmer of hope in April had interrupted an 18 month slide in car sales in Europe, battered by Eurozone woes, recession in several countries, high unemployment and low consumer confidence.
Car sales fell by around 10% in France and Germany, and 8% in Italy. Cyprus saw sales dive by over 40%, with the country experiencing capital controls that have prevented people from withdrawing large amounts of money from banks, and a recent bail out which has knocked confidence.
Sales have been falling off a cliff for five years now. Some analysts had previously predicted that 2013 would be the year that the market hits the bottom. Little sign of that; the cliff is much bigger than many had expected.
In fact, the consultancy firm Alix Partners has estimated that mature market European sales will drop to 12m units in 2014, down from an already dismal 13.2m last year, and won't start to grow again until the end of this decade. It's 'carmaggedon' as Fiat's boss Sergio Marchionne has colourfully termed it.
Across the five months of the year so far, 2013 has seen a total of 5,070,840 new cars registered in Europe, 6.8% less than in the first five months of 2012. The firm hit hardest in May in the 'squeezed middle' of car makers was Peugeot Citroen, with sales down by 13.2% on May 2012.
The firm is trying to revive its fortunes by cutting costs through a plant closure, thousands of redundancies and a joint venture with GM Europe to develop models and source components together.
Meanwhile, GM saw its sales fall by 11.3%, while Ford saw flat sales. Both have announced plant closures and lay-offs.
The UK was again the only big market to record a rise in sales, seeing an 11% rise in sales as compared with May 2012, the 15th month on the run that sales have been up. Quite why this is continues to be something of a mystery given that real incomes have continued to be squeezed and the economy has flatlined in the last couple of years.
Maybe a mix of strong competition as European firms offload cars in the UK with heavy discounts combined with a consumer windfall given large payouts from the payment protection insurance mis-selling scandal (upwards of £9bn so far) have helped.
The huge downturn has left an industry in crisis, with sizeable levels of excess capacity, heavy and unsustainable price discounting and a raft of plant closures. But there may well be more to come. A recent study by Alix Partners found 58 of the 100 largest car assembly plants in Europe operating below the critical benchmark of 75% of their capacity.
That level is important as plants operating above this level are operating at low cost, whereas plants operating below 70% see lower productivity, higher costs and losses.
Typical is Renault, with several French plants running well below the 75% mark, in some cases as low as 34%. The firm has tried to slim down but the part French government owned firm has agreed with unions to keep open all its plants while making job cuts, and is even bringing Nissan Micra production from India to France to use excess capacity (Micras had previously been made in Sunderland but were then shifted to India and now to France).
And it isn't clear when sales will pick up. Alix, for example, see little growth in sight. The contrast with the US is marked, as I've pointed before. In the US the federal government took the lead in saving GM and Chrysler through Chapter 11 bankruptcy, heavy bail outs, restructuring and shrinking. Add in a more growth orientated macro-economic policy and today both GM and Chrysler, with the latter now owned by Fiat, are back in the black.
In contrast, all the European brands apart from the Germans are losing money. And even the profitable Germans are now being affected. Volkswagen has five plants running well below the 75% mark, according to Alix, Mercedes-Benz three and BMW two. One difference though is that the likes of Audi have been expanding massively in China in recent years so can count on big profits from there to keep powering ahead.
* Professor David Bailey works at Coventry University Business School