Johnson Controls CEO:Europe May Lead Auto Sector Out Of Slump

The top executive at Johnson Controls Inc. (JCI) said Friday that consumers in Europe rather than North America could lead the global industry out of recession.
Stephen Roell, chief executive officer of one of the world's largest auto suppliers, remained more bearish than most in the sector about sales this year.
But he told analysts on a conference call that the larger European market was likely to rebound first, in contrast to most industry observers.
"European consumers don't have credit card debt, they don't have the housing problem in Germany and France and the unemployment levels are not historically out of balance," he said. "I have reason to believe that Europe could actually lead us out of this thing if we can get the consumers there confident about going forward."
Milwaukee-based Johnson Controls is one of the world's largest suppliers of automotive seats and batteries. It also provides commercial building services such as heating and air conditioning.
Roell predicted the European market could fall a further 30% this year, while North American industry light vehicle sales could hit 9.2 million after dropping to 13.2 million in 2008.
His views contrast with comments made by executives from General Motors Corp. (GM), BMW AG and Daimler AG (DAI) at the North American International Auto Show in Detroit this week.
They said the U.S. was expected be the leader, and GM Chief Financial Officer Fritz Henderson said Thursday that Europe usually lags the U.S. economy by four to five months.
European registrations for new passenger cars slumped to a 15-year low in 2008 as weak consumer confidence ate into demand for new cars amid the worldwide financial crisis.
New-car registrations, which reflect sales, fell 7.8% to 14.7 million last year from 2007, the European Automobile Manufacturers Association said Thursday.
New vehicle sales in the U.S. dropped to 13.2 million in 2008 and are expected to fall again in 2009 to a range of 10.5 million to 12.2 million, according to assumptions used by the Detroit Three manufacturers.
An unexpected European recovery would pressure auto makers and parts suppliers to switch more focus to overseas markets to keep production in line with demand.
Roell also said the company was taking more work in-house because a third of its own supplier base was in "financial distress."
His remarks came as Johnson Controls swung to a fiscal first-quarter loss of $ 608 million, or $1.02 a share, which included $562 million in write-downs. Net income a year-earlier was $235 million, or 39 cents a share. Net sales slumped 23% to $7.34 billion.
Its shares were down 7.8% at $15.74 in afternoon trade.