Groupe Lohr, which manufactures car carriers and rail wagons, has sold its Translohr division, which makes tyre-based trams, to offset losses to its Lohr Automotive division and secure its finances as its waits for a recovery in the European market.

Rail transport provider, Alstom Group, and private equity firm, Fonds Stratégique d'Investissement (FSI), supported by the French ministry for Industrial Recovery, have bought the division outright for €35m ($43m). Alstom, which supplies rolling stock, transport infrastructure, signalling and global rail systems, has taken a 51% share, with the FSI acquiring 49%.

While reported to be unaffected in Asia, the car carrier side of Lohr’s business suffered what Groupe Lohr has described in an official release as an “instant and massive loss of business”, mainly in Europe, when the financial crisis hit the automotive market in 2008, a situation that has been exacerbating by further declines this year.

Lohr said the Translohr sale would help the group focus on its historical fields of competence and reorganise to face “the rapidly changing perspectives of the automobile industry” in a more sustainable way.

Lohr Automotive's managing director, Eric Belton, told Automotive Logistics News that with the sale of Translohr the group could get "back on track toward a sound financial situation and give the European division enough oxygen to wait for better times."

Belton admitted that the sale was not an easy move for the company. Belton described the Translohr business to be “very promising” and said that it had started to generate significant return.

Despite the losses sustained by the car carrier division, Lohr has continued with research and development of a complete new range of car transporters and, as reported last September, sold 17 transporters to Gefco. It has moved into new markets, including India and North Africa. However, Belton stressed that there is a deeper issue at stake relating to sales, investment and the renewal of the car carrier fleets in Europe.

"The European fleet is ageing and for four, going on five, years sales in the region have been 60% under what they should have been to just ensure a normal renewal of the existing fleet," said Belton. "In addition to that, the fleet in some countries has itself very significantly contracted, far more than needed, and obviously far more than the contraction of European car sales itself, which, after all, over five years has not been that massive at all."

Sales across the EU in the first six months of the year have declined by nearly 7%, according to ACEA, although the drops in southern Europe have been more pronounced. Sales are currently around 20% lower than in 2007 across the region.

Belton estimated that, based on a 10-12 year life expectancy for a car transporter in Europe, the market is in need of a significant renewal phase.

Lohr has meanwhile seen a strong uptick in business across other regions, including Russia, Asia and North America.

"Asia, which for us is India and China, is very active," said Belton, while the US and Mexico are also significantly up in 2012. In addition, Turkey is expected to show good results for the second year in a row this year.

“So really, Europe is the only slow area at this stage and, therefore, should initiate the necessary recovery based upon the renewal requirements of the fleets," said Belton. "The only question is when?"