General Motors (NYSE: GM) warned that losses in Europe will be greater than expected in the second half, according to the Wall Street Journal. The news was easy to forecast. None of the large car manufacturers that do business in Europe will do well this year. Management at Ford (NYSE: F) recently told the press that the company would suffer larger-than-expected losses in the current quarter.
Too many people are out of work in Europe. And most auto firms cannot cut costs quickly. They face resistance from strong unions and local governments bent on doing whatever they can to save jobs. The negative outcome of the slow sales and inability to cut expenses quickly is that losses among all the companies in the industry will total well into the billions of dollars in Europe this year. There does not appear to be much the manufacturers can do about it.
Douglas A. McIntyre
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