While budget players like Hyundai and Kia continue to do well in Europe, as do the premium brands like BMW and JLR, the 'squeezed middle' of Ford Europe, GM Europe, Peugeot-Citroen and Fiat are expected to lose a combined $6.4bn this year.
That has left firms scrabbling to find ways to restore profitability, including plant closures and tie-ups to cut the costs of developing new models.
Peugeot-Citroen is now thought to be looking for a possible tie-up (life-line?) with the Chinese firm Dongfeng. And partly as a result of that, General Motors (which is closely tied to Dongfeng's rival Shanghai) has cashed in its seven per cent stake in Peugeot as part of a broader scaling back of the alliance between the two.
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Peugeot is thought to be looking at a €3 billion capital increase (share issue to you and me), with both Dongfeng and the French government potentially buying a stake, thereby acquiring around 20% per cent each of Peugeot. It would be yet another bail-out by the French government.
Peugeot-Citroen's automotive division lost €510 million in the first half of 2013, and is expected to lose around €750 in the second half of 2013. It burned through an impressive €3 billion in cash in 2012, and has been kept going by a series of hefty bail outs by the French government in recent years.
This year the firm expects to burn through another €1.5 billion but to break even by the end of 2014. That target looks rather optimistic.
While raising fresh capital from Dongfeng and the French government will help reduce Peugeot's debt, and buy more time, it won't change the firm's underlying fundamentals such as the lack of capacity utilisation, high costs, and poor revenue growth.
Meanwhile, Peugeot's ex-shareholder General Motors has decided to largely scrap the Chevrolet brand in Europe. Taking an American brand best known for big cruisers and slap it on cheap small cars made mainly in Korea by the defunct Daewoo and then sell them in Europe was always a pretty dumb idea.
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Indeed, what this bizarre strategy did was to effectively cannibalise GM's sales in Europe. While GM claimed that Opel/Vauxhall model were classier than Chevrolets and hence would not compete head on, in practice they did exactly that.
GM vice-chairman Steve Girsky claims that GM Europe's turnaround will be one of the most spectacular in auto history. That may or may not be the case, but dumping Chevvy at least suggests that GM is finally getting serious about stemming huge losses in Europe.
The firm lost $1.8 billion in 2012, and expects to lose only slightly less in 2013. It has lost a mind-boggling $18 billion since 1999. GM hopes that it European operations will break even by 2015-16, which isn't far away.
To that end GM Europe has announced another restructuring plan involving the closure of one plant in Germany. Earlier this year it announced a $5.25 billion investment plan which will involve 23 new vehicles and 13 new engines. Yet doubts remain about GM's willingness to stick the course given its aborted sell-off a few years ago.
So both Peugeot and GM are struggling to turn things around. Whether their efforts - and those by Ford and Fiat - go far enough, though, is the $6.4bn question.
Of course, what all the mass market players want is for the European automotive market to pick up. That, however, requires economic growth in Europe.
* Professor David Bailey works at the