If General Motors Co. (NYSE: GM) and Ford Motor Co. (NYSE: F) need success in Europe to round out whatever strength they have in Asia and the United States, then each suffered a sharp setback last year. Overall car sales in the European Union dropped by 1.7% in 2013. GM and Ford’s sales dropped much more. Even in a falling market, some of their main competitors have gained ground on them, according to the European Automobile Manufacturers’ Association (AECA).

The two Americans face a huge rival in Europe — Volkswagen, which has 25% of the market. By way of comparison, GM has about 18% market share in the United States. Ironically, VW’s sales in America have been a setback for the global manufacturer.

VW sold nearly three million cars in Europe in both 2012 and 2013. GM sold 946,099, down 4.9% from 2012, which put it in fourth place behind PSA Group and Renault Group. Ford’s rank was fifth, with a sales loss of 3.2%, and BMW was not far behind it in units sold. Japanese rivals Toyota Motor Corp. (NYSE: TM) and Honda Motor Co. Ltd. (NYSE: HMC) have much smaller sales at 509,328 and 131,411 respectively. However, each performed better in 2013 in terms of market share.

The major financial problem that has faced GM and Ford as each has emerged from the recession is that Europe has troubled them in two ways. The first is that the extremely deep recession has hurt virtually all car companies. The second is that the losses each has suffered cannot be curtailed without cost cuts or market share improvement. The two U.S. car companies have had little success on either count.

Also, if GM and Ford want significant success in Europe eventually, they will have to conquer some portion of the luxury segment. That will be difficult because BMW and Mercedes continue to do relatively well. Neither Cadillac or Lincoln has a major presence in the European market.

Unless the trend for Ford and GM in Europe changes radically in 2014, both companies will suffer financially for another year.

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