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Worse Than The Infamous Lehman September: France’s Private Sector Gets Kicked Off A Cliff
This should have been an exciting moment: the Paris auto show, “Mondial de l’Automobil,” this weekend with over 100 new models from around the world, from econo-boxes with rounded corners to exotic prototypes that will never see production. Chicks next to some of them. Nausea-inducing colors, downsized motors. Something for everyone. But it had been preceded by two days of supplier events loaded with the dire verbiage of an industry that is on a death march. Particularly in France, whose private sector is veering into economic fiasco. And on Monday, it became official.
A barometer of the real economy in France, new car sales as measured by registrations, crashed in September—down 18.3% from September last year, and accelerating (year-to-date, sales were down “only” 13.9%). It was the worst September in years, worse even than the infamous Lehman September of 2008. And 2012 is shaping up to be the worst year since long before the financial crisis.
Of the French brands, market leader PSA Peugeot Citroen saw sales drop “only” 5%, helped by the introduction of its new sub-compact Peugeot 208. But year to date, sales were down 18.4%. Renault got killed. A stunning 33.4% plunge for the month and 19.8% YTD.
An equal-opportunity fiasco. Even the heroes from across the Rhine got their clocks cleaned in France. Volkswagen (VW, Audi, SEAT, Skoda) fell 17.4%. BMW and Mercedes where hit as well. GM (Opel, Chevrolet) tumbled 20.8%, Ford 31.5%. And Fiat, well, it might as well hang up its hat: down 38.4%!
In an ominous sign for the private sector and its investment climate, light utility vehicles (less than 5 tons) dropped 12.5% for the month, and “industrial vehicles” (over 5 tons) 20.1%.
“It’s unclear if automakers can survive without government help,” lamented VW CFO Hans Dieter Pötsch. But government help may be hard to come by. Steeped in the debt crisis, governments are struggling to reduce their deficits, or at least keep them from ballooning. Cash-for-clunkers programs, which burned through many billions of taxpayers euros after the financial crisis, or outright subsidies, will be a tough sell when pensions, salaries, and social services are on the chopping block.
French President François Hollande could only waffle about supporting the “competitiveness” of the French auto sector. Alas, on the production side, the sickness goes back years. In 2005, PSA and Renault together assembled 3.2 million vehicles in France; last year, it was less than 2 million, and this year will be even worse.
And then the second shoe dropped. France’s Manufacturing Purchasing Managers’ Index (PMI) dove to 42.7 in September, the lowest reading since April 2009, during the depth of the financial crisis. Only Greece, which lost a fifth of its economy over the last five years, was lower, but barely so. Even Spain outperformed France. Export sales skidded, but the worst was in the domestic market. New orders were particularly hard hit, a harbinger for pain to come. Lacking new orders, manufactures ate up their backlog at the fastest rate since March 2009—when the economy appeared to have seized.
Lack of work pushed the PMI employment component down for the seventh month in a row. Already, with unemployment at 10.6%, youth unemployment at 25.2%, and rising, and more than 3 million people out of work for the first time since 1999, heat is building up in the system.
Lay-offs, albeit difficult to undertake in France, have been making headlines. Trophy companies are involved, PSA and Air France-KLM Group, for example. Hollande himself stepped in to prevent them, or at least to delay them. Today’s headline hog is ArcelorMittal, largest steelmaker in the world. It will, despite government machinations, permanently shut down two idled furnaces. Furious workers instantly occupied the plant. At least they didn’t take management hostage, not yet.... [Taking Bosses Hostage, a Negotiating Tactic in France].
The largest companies get most of the attention. But the confidence barometer of small and medium-sized businesses—the ones that are supposed to create most of the jobs—crashed in September to 84, the lowest level ever in the series, which started in 1992. It was at 129 in April. That’s what falling off an economic cliff looks like.
The private sector in France is only 44% of the economy, and shrinking. 56% is public spending, to remain level in the 2013 budget. So a measure of stability. But to reign in its deficit, the government is trying to impose a slew of tax increases on the private sector and households—how exactly that might perk up the private sector remains a mystery. Fasten your seatbelts.
In Greece, whose PMI was even worse than France’s, GDP, bad as it is, no longer does justice to reality. Take new vehicle registrations: they plunged 46.7% from prior year and 80% from 2008. People have stopped buying new cars. And not just cars! Read.... Greece, Tell Brussels “To Take A Hike” And Let The Troika Bail Out The ECB Instead.
And here is Switzerland-based George Dorgan wading into a nasty fight between the Swiss National Bank and Standard and Poor’s. Read.... Is Standard And Poor’s A Rating Agency Or A Rumor Agency?
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"Particularly in France, whose private sector is veering into economic fiasco."
And your data describes the cliff so well Wolfy, thanks
We cannot expect a loony-leftie like Hollande to connect the dots between ever-theiving public sector and ever-declining private sector
spend away Mr Marxist, see where it gets you (see USSR, China, North Korea, Greece etc.)
france is on the austerity ticket; as IMPOSED by Mutti Merkel.
It has to shrink its deficit to <3% in 2013/2014. Then the core will be in a position to restructure the peripherals. If....
That is if the debt tsunami has not blown away the ECB in the meantime.
But that is another story. Its called SUPRANATIONAL geo-politics; its in the hands of Pax Americana; who have only one thing to say today : save WS assets, and the TBTF. Period.
What are European autoworker wages and benefits compared to the average worker? Are these wages and benefits 'set in stone' by contracts - union or otherwise?
Whatever the level of pay, can it be maintained as the average level of people's pay drops?
French autoworker are above average, we are part of the metalurgist deals between unions, government, and corporations. Set in stone. Wages are maintained, hiring are freezed. Only hiring trainees (students), or 18 months contract.
With those youth unemployment numbers, one would expect fire truck sales in Pearee suburbs to soar.
lets see; socialism is working just fine
greece check
spain check
usa check
aussie check
list goes on
since socialism is a success
how about totalitarian gov
me countries check
chavez check
china check
sudan ect check
humans are so fucking stupid...can not link cause and effect
r vs d media bs> loose clear thought that these fuckers are the problem not the solution>they got us in this mess.
pretty fucking simple...
at least a monkey runs scared when a bankster shows up...
Why is it that when governments increase spending in order to counterbalance a contracting private sector they always manage to somehow screw the private sector and make it collapse even more?
Yes, that was a rhetorical question, I already know the answer.
Yes...it was all rhetoric.
...because politicians (parasites) do not want to find solutions, they want to find budgets (excuses?) to spend other peoples money
second only in problem solving crapology to bwankers who want to issue debt as a way for society to 'progress'
Canary in the shit mine?
They keep digging deeper and deeper:
Greece, Spain. now France, soon after Italy, Belgium, China ...... and soon enough the USSA.
I give Bernanke no more than 3 months even if Obama wins.....He likely will use him as an excuse and dump him as he should have done a long time ago, but now he'll need a big escape goat, he's a politician after all.......................
I just wonder, if the Bernank suddenly and unexpectedly vanished , how would the markets react????
Next shortage in France will be paper.
The bankster boys can solve this with one hand. Print your brains out and distribute to your bankrupt club members.
Is there any doubt what course they will take?
Long on toner, short on Forests.
On the face of it, the sovereign debt problem should be a no brainer; either bail out the banksters by willingly reducing your standard of living, or default and hope that the future will be better. The first will undoubtedly and eventually result in revolution when the sheeple have had enough, unless the state can implement totalitarian control. The template for Europe was the 1930s.
Have the European history books been cleansed that thoroughly?
Yes, the nefarious german Chancellor who stiffed the banks has been cast firmly into the outer darkness forever. All it took was some fake testimony about gas chambers and lots of celluloid.
Fascinating. They're eschewing cars in Europe now and choking the roads with them in China.
If China can't sell its shitty products in France - or in the rest of Europe, for that matter - cars won't clog its roads for very long.
It's simple really: if you sell something, and there is no buyer, how can you stay in business for long?
The world will be a better place without French cars.
...but not without French food.
still, beats North Korea for sparkle
linking cause and affect is extremly difficult for humans. instead they bend over after a cry session(protest) and
go home and cry some more and come back out and vote for the politician that gives them the most for nothing.
they in the end deserve the big hard one right up their ars. until they start burning castles, storming banksters
homes and overturning mercedes and a8's it is all just more of the same...
do you want a revolution beatles circa 1969...
The system looks like it will never clear in my lifetime. Se la ve
If auto industries, dairy industries, solar industries, et. al. aren't able to 'survive without government help' then they should go bankrupt and be liquidated.
The same goes for ANY ongoing concern, including Governments, schools, postal services, etc.
It's the 'trying to save everything' thats KILLING EVERYTHING!
Edit: Oh, and don't forget BANKS!
Iceland did the right thing: liquidate the banks, force debt forgiveness, let unemployment skyrocket, prosecute financial fraudsters, bailout homeowners instead of the inglorious basterds of the financial sector.
For those who think this is BS, ask yourself why global rating agencies are congratulating Iceland by returning their bonds to investment grade while signaling their "unorthodox methods" to sovle the crisis?
Oh! Check also their econ performance too.
I agreee but... Well, let's start with the banks, shall we?
The problem is simple, really: give a banker free reign, and he will manage to dig a hole deep enough no one will ever be able to climb out of. This is why we have QE to infinity and other monstruosity.
I know these are very dirty and very naughty words on ZH, but REGULATIONS and NATIONALIZATIONS are the order of the day. Iceland is the country to imitate!
Or, as Lord Maynard Keynes would say: "It is high time to euthanize a generation of Bankers" (and I just committed another big no-no on ZH).
We need properly functioning banks to have a properly working economy. Nationalize the banks that are TBTF, too-small-to-fail,etc. Nationalize all of them, guarantee the deposits of the clients, tell their creditors to roll up and die. Bring back some sanity to the markets and to finance in general. Fire an entire generation of bankers, lock them in prison if foul play is involved - all of the things that the vast majority of the freaking idiots in power - ALL OVER THE WORLD - have been unwilling to do (not biting the hands that feed them, right?).
Then, let the banks lend to worthy projects, insure a level playing field. Finally, stand back and let the market sort it all out. And, yes, this means letting the few remaining banks go bust if need be.
So simple yet so true
“It’s unclear if automakers can survive without government help,” lamented VW CFO Hans Dieter Pötsch.
These leaching fucks in the auto industry always have that canned statement ready to go. This is the moral hazard that Obama has created. Fucking asshole.
Obama created an excuse for the French?
Wow, whooduh thunk.
So the European auto makers aren't channel stuffing? Wow!
'Government help'
Got me on that one.
The cancer (56%) is already larger than the host (44%).
The cancer (56%) is already larger than the host (44%). By Urban Redneck
+infinity
the only think you will never be able to recover is lost time..and we lost 5 years already
The global government propaganda machine has been telling us cars are evil for decades, but now the industry needs to be saved because?
theres no carbon taxes with out the 'car's
Because? Jobs you fool, the next batch of cars will be designed to fall apart faster than you can replace them, all in the name of money. Where have been the last few decades?? Living in a hole in the ground???
de l'or, putains!
Le frog needs to rise up
There is frenchie called pierre woodman who could direct the fisting of the banksters
In an ominous sign for the private sector and its investment climate, light utility vehicles (less than 5 tons) dropped 12.5% for the month, and “industrial vehicles” (over 5 tons) 20.1%.
When you have a DUMB SOB,taxing the so called wealthy at 75%,and most leaving in droves.It will just get MUCH worse.
They deserve it.
Yes, the people get the government that they deserve.
- Ned
It's a global axiom.
Darwin should have studied politics too.