Europe's car makers get Chinese warning

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Europe's leading carmakers need to be alert to the growing threat posed by manufacturers in China and South Korea or they could suffer the same fate as the US car industry experienced at the hands of the Japanese, a report warns today.

The annual survey of the world automotive industry published by KPMG International says that European manufacturers must learn from the lesson of their US counterparts, who may never recapture the market share lost to Asian competitors over the last decade.

The survey, based on replies from 140 senior automotive executives around the world, also paints a gloomy picture of the industry's financial health with more than a half of respondents expecting profits to be volatile or in general decline.

Mike Steventon, head of automotive for KPMG in the UK, said: "The challenges facing the American manufacturers should serve as a wake-up call to the European manufacturers. The irresistible rise of the Asian brands has been bolstered by South Korean and Chinese manufacturers adding to the impetus which the Japanese brands created.

"Europe is a highly attractive market for the existing and emerging Asian brands and European brands therefore need to ensure they are better positioned to deal with the challenges this brings than their American counterparts were."

Nearly nine in ten of the executives questioned expect Asian carmakers to gain more market share, but only 19 per cent thought US brands would do likewise. KPMG added that this year it had even seen real concern among US carmakers themselves about whether they could ever reverse the loss of market share.