Nissan- Renault CEO Carlos Ghosn is forecasting continued troubles in for automakers in the European market. Addressing the audience at a Wall Street Journal event in New York on Tuesday, Ghosn said he expects to see “three to four more years of stagnation” for the industry, but predicted the European Union will remain intact, despite ongoing troubles in Spain, Greece and Portugal.
“I think the euro will stay,” said Ghosn. “I think at the end of the day Europeans will find the solutions in order to hold Europe together.” If Spain, Greece or other EU members did decide to leave the union, Ghosn said he thinks their departures would only be temporary.
However, automakers, he said are preparing for the worst case scenario. “I think we’re going to have some difficulty in front of us,” he said. “I have absolutely no doubt the next three, four years Europe are going to be at best stagnation. We are preparing for tough times.”
The problem for automakers, he said, is that European consumers are putting off making large purchases until economic stability and certainty are restored and that, he said, could take up to four years.
Speculating on the short-term growth of the European auto market he said, “My best scenario is zero to 1 percent. We have some worse scenarios for which we need to prepare as companies. For the moment, we’re planning for the worst, and the worst is now.” In Renault’s home market of France Ghosn said, “The car market is down more than 15 percent.”
In Nissan’s home market of Japan, the strong yen has made it difficult for automakers to generate profits. Although Nissan, like other Japanese automakers, is shifting its production capacity to other markets, Ghosn said Nissan plans to stay put.
“We are stunned by the yen at 78 or 79 to the dollar, which is a historical high,” he said. “My duty is first to make sure Nissan gets unscathed through the turbulence to protect the company, without forgetting the fact we’re a Japanese company.”