Italian carmakers seek aid as suppliers warn on ‘09

PARIS - Italy’s carmakers, seeking aid to ease a crisis that threatens Fiat SpA’s survival, prepared to meet ministers on Wednesday as two key parts suppliers to the auto sector warned of further cutbacks in 2009.

By (Reuters)

Published: Wed 28 Jan 2009, 7:49 PM

Last updated: Thu 2 Apr 2015, 4:34 AM

As UK-based carmakers digested Tuesday’s government pledge of 2.3 billion pounds ($3.3 billion) in guaranteed loans, British aerospace and automotive engineer GKN Plc announced a further 1,400 layoffs in its automotive division and signalled more cuts in 2009.

In Germany the world’s biggest auto parts maker, Robert Bosch, said 2008 earnings before tax fell to 2.5 percent of sales from 8.2 percent a year earlier.

The figure was “clearly below the target line (and) ... we have to be prepared for further negative developments in 2009,” Chief Executive Franz Fehrenbach said late on Tuesday.

Top executives of Fiat, Italy’s biggest manufacturer, met government ministers on Tuesday to lobby for incentives to get consumers buying cars again ahead of Wednesday’s industry-wide gathering, which is scheduled for 1730 GMT.

According to news reports, the value of the packages the Italian government is prepared to offer lies between 260 million and 1.2 billion euros.

Fiat Chief Executive Sergio Marchionne has warned that 60,000 jobs are at risk if nothing is done to help the beleaguered sector.

Fiat, Europe’s sixth largest carmaker, is in talks about a partnership with Detroit-based manufacturer Chrysler and needs a credit line to help cover 3.3 billion euros of debt maturing this year.

Carmakers worldwide are battling falling sales as the credit crunch and worsening economic outlook hit cash-strapped consumers.

Marchionne predicted in December that the crisis would spark extensive consolidation, leaving only six volume automakers worldwide.

In Spain, among the worst hit of European markets in 2008, car manufacturers’ association ANFAC said on Wednesday that new family car sales could fall to 900,000 units in 2009, from 1.16 million in 2008.

UK car industry representatives were meanwhile set to meet business minister Peter Mandelson on Wednesday to discuss Tuesday’s support package.

The UK is one of several European countries putting in place measures to help the automobile industry. The U.S. government is being pushed to provide more support for its automakers as they invest in technologies for fuel-efficient vehicles. It pledged $17 billion in December to bail out General Motors and Chrysler .

The British motor industry is largely foreign-owned, with groups such as Nissan Motor Co, Honda Motor Co and Ford Motor Co. operating major plants.

French prime minister Francois Fillon said last week the country’s government would pump up to 6 billion euros into the ailing sector, which provides jobs for nearly 10 percent of the country’s workforce.