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September 20, 2017

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Automakers casting wary eye toward Russia

GENEVA--Growing tensions over Ukraine have raised the specter of another slowdown in the European auto market, just as carmakers were beginning to count on a modest recovery from a six-year contraction.

Russia's intervention in Ukraine has raised the possibility of sanctions against the country, which has been a key growth market for recession-battered European automakers. On the first day of the Geneva Auto Show on Tuesday, executives cast a wary eye toward the crisis.

"There is not a single doubt in my mind that if the situation in Russia and the Ukraine remains as tight as it is, or if it worsens from where we are, that it will dampen demand in western Europe," said Fiat Chrysler Automobiles CEO Sergio Marchionne.

Barring a full-blown crisis over Ukraine, Marchionne says he expects to see a modest recovery, but mainly led by "extraneous factors" like fleet sales and not consumer demand.

Before the Ukrainian crisis began, analysts predicted European car sales would grow by 2 percent to 4 percent — which is still 3 million vehicles off the 2007 peak.

"There is always going to be a surprise out there. Ukraine is an example. You have to be flexible," the CEO of Ford Europe, Stephen Odell, told journalists on the Geneva Auto Show's opening press day.

With three plants and annual sales volumes around 120,000 units, Russia is important to Ford Europe's goal of returning to profitability by 2015. Odell says the company is not giving forecasts for 2014 volumes in Russia " and frankly, given the volatility we have to wait and see." The key going ahead, Odell said, is to have a plan but not be so rigorous in the face of changing realities.

The Renault Nissan alliance has the biggest market share in Russia thanks to its partnership with the Russian brand Lada, and operates four factories in the country. Last year sales were 821,404 for a 29.6-percent market share.

"I think we have to be very prudent," Renault Nissan senior vice president Christian Mardrus told the Associated Press. He said the speed of the changes made the situation impossible to predict.

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