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European car industry could take five years to recover

It could take five years for the European car industry to return to pre-recession sales levels.

It also faces heavy losses while waiting for an upturn in business, according to AlixPartners, the company behind the restructuring of General Motors, reports The Daily Telegraph.

Due to fewer and smaller cars being sold as consumers watch the pennies, the industry faces a liquidity crisis resulting in a £25.7 billion global cash surplus being wiped out this year.

About £20 billion could be lost in 2010.

Credit Suisse added to the concern because of doubts about sales volumes in the second half of 2009 once state support schemes are withdrawn.

The company also warns Government incentives such as the scrappage scheme, threatens to cause a damaging over saturation of the market resulting in a demand vacuum when it ends.

Stefano Aversa, managing director of AlixPartners said: "The real crisis for the automotive industry has yet to arrive. When Governmental incentive programmes expire that will truly be "zero hour". 


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