Ford is cutting capacity in Europe to stem losses as sales have plummeted with the economic crisis. Overcapacity is a real problem in Europe for all the automakers, and we’re now seeing a bit of a death spiral as the slowdown creates more problems. The Europeans have been dealing with a debt crisis, but the central bank there has not been nearly as aggressive as the Fed in the US, where massive monetary stimulus has helped to keep the economy afloat. Austerity measures in Europe are needed but they have compounded the problem with the weak monetary response.
Meanwhile, in the US, after the auto bailout, the Fed stimulus and the Obama stimulus, the economy is slowly growing, but at least it’s growing. The auto bailout trimmed the number of dealerships, and that has helped those left over to be successful. You go into a dealership and you’ll see plenty of activity. The used car market is also robust, and that helps dealers, independent used car dealers and online sellers. This activity helps ancillary businesses, like advertising and business printing services, that rely on this economic activity. Sellers and dealerships are buying ads, making car repairs, and getting promotional materials and print brochures online at UPrinting and other online outlets. This ripple effect is critical.
Those in the US who opposed the auto bailout and the stimulus should look at what Ford is doing in the UK.
