Automobile Industry 01 (Aug 08 - Sep 15)

[millionairemind]

January 30, 2009
Honda suspends UK production as profits plunge
Workers on the Civic production line at the Honda factory in Swindon

(Barry Batchelor/PA)
Dominic Walsh

British workers at Honda will start an enforced four-month layoff today against the backdrop of a further dire warning over the trading outlook from the Japanese car giant.

The company, one of the bellwethers of Japanese industrial health, slashed its annual profit target by more than half this morning as its quarterly profits slumped by 90 per cent.

The poor results emerged as Japan revealed a record 9.6 per cent fall in manufacturing output during December, the sharpest fall since 1953.

Honda, Japan's second-biggest carmaker, will tonight be mothballing its plant in Swindon, where the majority of its 4,200 British employees are based, in response to a slump in car sales.

[winston]

China auto sales seen surpassing US in January
The Associated Press

SHANGHAI: China likely overtook the U.S. in vehicle sales for the first time last month, a trend that could make China into the world's largest auto market this year.

Official data for China's auto sales in January will not be out until next week. But they are expected to show sales at about 790,000 units for the month, Zhang Xin, an analyst at Guotai Junan Securities in Beijing, said Wednesday.

In the U.S., meanwhile, auto sales in January tumbled 37 percent to 656,976 vehicles, the lowest monthly level in 26 years.

"This is the first time in history that China has passed the United States in monthly sales," Mike DiGiovanni, General Motors Corp.'s executive director of global market and industry analysis, said in a conference call late Tuesday.

For all of 2009, DiGiovanni projected that Chinese auto sales are likely to hit 10.7 million vehicles, more than the estimated 9.8 million unit sales in the U.S. this year. Autodata Corp. forecasts 2009 U.S. sales at 9.57 million.

Commercial vehicles such as trucks and buses make up a larger chunk of China's vehicle market than in the U.S., causing some people to say comparing such statistics is misleading.

But China, with its 1.3 billion people, was bound to catch up with the U.S., population 300 million, sooner or later, and the latest trends suggest it may be sooner than expected due to the drastic contraction in the American auto market.

General Motors is one of China's biggest automakers, with billions of dollars invested in joint ventures and a record 1.09 million vehicles sold in 2008, up 6 percent from the year before.

Struggling GM has been counting on the growth in China, which passed up Japan in 2006 to become the world's second-largest vehicle market, thanks to strong sales to the country's fast-growing middle class.

But lately China's car market has been cooling as consumers hold off on big purchases. Domestic vehicle sales rose only 6.7 percent in 2008 to 9.38 million units — the first time growth has fallen below 10 percent since 1999.

And January's sales in China fell about 8 percent from the monthly record 860,000 vehicles in January 2008. That same month in the U.S., sales topped 1 million.

After seeing sales slow abruptly in the autumn, Beijing moved aggressively to prop up the industry it has nurtured over the past two decades.

Last month the government announced it was halving the tax on purchases of cars with engines less than 1.6 liters, to 5 percent, until the end of the year. It is spending 5 billion yuan (about $730 million) on subsidies to farmers replacing their three-wheeled vehicles or outdated trucks with small, 1.3-liter or less vehicles.

The government has also pledged to spend 10 billion yuan ($1.5 billion) on upgrading automakers' technology and developing alternative energy vehicles. The push is to promote more energy efficient vehicles while improving the competitiveness of the country's highly fragmented auto industry.

So far, the steps seem to be helping somewhat.

"Sales rebounded last month due to the vehicle purchase tax cut," said Gao Zhiyuan, a salesman at Shanghai Automobile Industry Hudong Sales Co., a Volkswagen dealership.

"Customers feel it's a good chance to buy a car for less since the tax cut is temporary. Also, with lower gasoline prices people are less worried about fuel costs," Gao said.

The dealership has offered free laptops, fuel cards worth hundreds of dollars, and deep discounts on its VW Polos and other economy models.

Small cars accounted for nearly two-thirds of the vehicles sold in China last year, a trend policymakers are encouraging given worries over pollution and rising dependence on imported oil. The tax cuts announced in January left in place higher taxes on big-engine gas guzzlers that were announced last summer.

Strong demand for smaller cars is helping both domestic and foreign-brand automakers.

While few automakers have released monthly sales figures yet, South Korean automaker Hyundai Motor Co. reported its China sales rose 35 percent in January from a year earlier, to 42,790 vehicles.

But even though China's auto industry may appear to be weathering the crisis with less of the misery seen in the Detroit and elsewhere, it still has a long way to go to catch up with global rivals, analyst Zhang cautioned.

"Our technology is still weak. We still have to copy or use Western advanced manufacturing systems. That's kind of awkward, isn't it?" he said.

[millionairemind]

Published February 5, 2009

STIMULUS SPENDING
US car and truck sales fall 37% in January

Hefty incentives from carmakers did little to boost sales
(DETROIT) Carmakers have started the new year in reverse.

Consumers, frightened by the prospect of losing their jobs, stayed away from car showrooms again in January and sent US car and truck sales falling 37 per cent, a familiar refrain for the struggling industry but an unwelcome start to a critical year for US carmakers.

Devastated by an economy in which few people have the spare cash to buy a car or can obtain the financing to do it, Chrysler's domestic sales for January were less than half what they were a year earlier.

Sales fell 49 per cent at General Motors and 40 per cent at Ford. Toyota and Nissan's sales each fell at least 30 per cent.

'How many ways can you say disaster?' asked Aaron Bragman, a car industry analyst with the consulting firm IHS Global Insight in Troy, Michigan. 'That's across the board. It's not unique to one company.'

With January's drop, the industry's sales have declined for 15 straight months when compared with the same month in the previous year. There has not been a year-over-year increase since October 2007, when light vehicle sales rose a paltry one per cent, according to Autodata Corp and Ward's AutoInfoBank.

The industry's sales of 656,976 vehicles, compared with just over a million in January 2008, translates to a seasonally adjusted annual sales rate of 9.57 million, according to Autodata. That's the worst performance since June 1982, when the US was mired in a recession.

Huge declines in low-profit fleet sales to rental car companies made January an exceptionally bad month, even though carmakers said that they were encouraged that retail sales appeared to be stabilising after four straight months with an industrywide sales plunge of at least 30 per cent.

'If you're starting from an extremely low point, pretty much anywhere you go is up,' said Mr Bragman, whose company has predicted annual sales for this year of 10.3 million, down from last year's 13.2 million and 16.1 million in 2007.

But executives anticipated a treacherous beginning of 2009 before the market improves.

George Pipas, Ford Motor Co's top sales analyst, was not sure whether 15 months of industrywide sales declines is a record, but if it is, it won't last long.

'I can tell you that it's only going to last for one month,' he said, predicting year-over-year declines until perhaps later in the year. Then, he said, with only a small increase, sales should surpass the dismal levels seen at the end of 2008.

US carmakers will need sales to improve if they want their turnaround plans to be successful. After receiving US$13.4 billion in federal loans to stay afloat, General Motors Corp and Chrysler LLC have said that they are basing their plans on industrywide sales this year of 10.5 million and 11.1 million vehicles, respectively.

But few people were expecting the carmakers to start 2009 at such a pace. January is typically a slow sales month, and the market is not likely to improve until the second half of 2009 as economic stimulus efforts take effect and access to credit improves.

The hefty incentives that carmakers have rolled out have done little to boost sales. Chrysler has been offering employee pricing, zero per cent financing and up to US$6,000 in rebates on its vehicles, and GM said that it will launch another zero per cent financing with the help of the US$5 billion in federal aid its financing arm, GMAC, received late last year.

The biggest dent last month was in fleet sales - big volume sales to rental car companies and municipalities - which fell sharply in January as production slowed or was shut down at many US car plants for most of the month.

GM said that its fleet sales fell 80 per cent to just over 13,000 vehicles in January, marking their lowest sales level since 1975. -- AP

[winston]

Farmers likely to get subsidy as part of relief measures for auto firms

Beiing is likely to next month unveil details of a plan to subsidise farmers' vehicle purchases as part of efforts to prop up the auto sector, state media reported.

Beijing will offer five billion yuan (HK$5.67 billion) to farmers buying minivans and sub-1.3-litre minibuses from next month until the end of the year, according to a broad plan approved by the Cabinet last month.

The report came as China Passenger Car Association said vehicle sales fell 0.2 percent last month from a year earlier to 647,594 vehicles.

But sales edged up from December, when they totalled 644,028 vehicles, according to data previously provided by the association.

The association's data may differ from official figures expected to come out early next week.

AGENCIES

[winston]

U.S. auto parts suppliers are asking for up to $20.5 billion in federal aid to survive the worst industry downturn in decades.

Suppliers are requesting $10 billion in direct loans from the Treasury Department, said Neil De Koker, president of the Original Equipment Suppliers Association in suburban Detroit.

They also are asking for an additional $10.5 billion that will flow through the Detroit 3 so that suppliers can be paid in 10 days for parts delivered instead of the traditional 45.

– Automotive News

[millionairemind]

Nissan axes 20,000 jobs as car crisis deepens
Nissan underlined the scale of the crisis facing the car industry after announcing plans to cut 20,000 jobs and warning of its first loss in almost a decade.
Japan's third largest car maker said on Monday that it expects to slump to a 265bn yen (£1.97bn) loss for the financial year that ends in March, just three months after predicting it would make a 270bn yen profit. It will be Nissan's first loss in 14 years.

Carlos Ghosn, Nissan's chief executive, said the company's "worst assumptions on the state of the economy have been meet or exceed.

"The global auto industry is in turmoil. Nissan is no exception," Mr Ghosn said. "In response to this crisis, which is not of our making, we have to re-evaluate our global headcount."

Nissan employs 3,800 people in the UK and has already axed 1,200 people at its plant in Sunderland. The company would not say how many more jobs will go in the UK.

http://www.telegraph.co.uk/finance/news ... epens.html

[kennynah]

maybe motorcycles will be the replacement...harley davidson....

[millionairemind]

GM, Chrysler May Be Put Into Bankruptcy to Protect U.S. Loans
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http://www.bloomberg.com/apps/news?pid= ... =worldwide
By Mike Ramsey and Tiffany Kary

Feb. 9 (Bloomberg) -- General Motors Corp. and Chrysler LLC may have to be forced into bankruptcy by the U.S. government to assure repayment of $17.4 billion in federal bailout loans, a course of action the automakers claim would destroy them.

U.S. taxpayers currently take a backseat to prior creditors, including Citigroup Inc., JPMorgan Chase & Co. and Goldman Sachs Group Inc., according to loan agreements posted on the U.S. Treasury’s Web site. The government has hired a law firm to help establish its place at the front of the line for repayment, two people involved in the work said last week.

If federal officials fail to get a consensual agreement to change their place in line for repayment, they have the option to force the companies into bankruptcy as a condition of more bailout aid. The government would finance the bankruptcy with a so-called “debtor in possession” or DIP loan, a lender status that gives the U.S. priority over other creditors, said Don Workman, a partner at Baker & Hostetler LLP.

[winston]

So are you going to buy those Chinese auto counters ? Well, a lot of "smart people" are now doing just that...

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DJ China To Unveil Auto Industry Stimulus Details Fri - Report

BEIJING (Dow Jones)--China will release further details of its stimulus plan for the auto industry on or around Friday, the Shanghai Securities News reported Wednesday, citing an official from a semiofficial industry group. The plan will focus on efforts to increase consumption and restructuring in the industry, supporting the development of technology and alternative energy, and aiding domestic manufacturers in the development of their own-brand autos, the report said, citing Dong Yang, deputy director of the China Association of Automobile Manufacturers.

China's State Council said in mid-January it approved halving the purchase tax on passenger vehicles with engines 1.6 liters and below to 5%, but didn't provide specifics for other measures.

[millionairemind]

GM Seeks Up to $16.6 Billion in New Aid, Plans 47,000 Job Cuts
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By John Hughes and Jeff Green

Feb. 18 (Bloomberg) -- General Motors Corp. asked the U.S. for as much as $16.6 billion in new loans, more than doubling the aid to date, and said it needs some of the cash next month to survive as it sheds brands and cuts 47,000 more jobs worldwide.

Chrysler LLC, propped up like GM with federal assistance, said it’s seeking $5 billion more from the government and will shed 3,000 more positions.

The automakers met a deadline yesterday to report progress in revamping operations with $17.4 billion in loans granted so far. Now, they must show the U.S. by March 31 that they can become profitable in order to keep the money. Along with Ford Motor Co., they got a boost when the United Auto Workers said it reached tentative agreements to help trim labor expenses.