• Home
• /
• Tech

Automakers gear up for long slowdown

SEOUL/FRANKFURT - Car and truck makers around the world signalled fresh production cuts and job losses on Wednesday with some warning the slump in demand may extend until 2010.

“It would be wrong to assume that this economic downturn is short-term in nature and will be over in only six months,” said Hakan Samuelsson, chief executive of German industrial group MAN AG.

MAN plans to cut output by 30 percent at its core truck making business next year.

The global financial crisis is making consumers increasingly reluctant to part with cash and lenders unwilling to offer credit, causing carmakers across the world to struggle to find buyers to keep their production lines running.

Matthias Wissmann, president of VDA auto industry association, told Reuters that new vehicle registrations could recover by 2010 but sales would fall to post-reunification lows in 2009.

“The situation on global passenger car markets is dramatic,” he said.

November sales plunge

All major automakers have reported double-digit declines for U.S. auto sales in November, hurt by the plunge in consumer confidence brought on by the turmoil in the financial markets and a weakening U.S. economy.

South Korea’s top carmakers Hyundai Motor and Kia Motors both said they had cut U.S. production levels after posting a 40 percent and 37 percent drop respectively in U.S. November car sales versus a year ago..

India’s largest motorbike maker, Hero Honda Motors Ltd, meanwhile, said it sees sales remaining under pressure as consumers struggle to raise finance to buy new machines.

Hero, in which Japan’s Honda Motor Co has a 26 percent stake, said it hopes to stick to the production plans it outlined at the beginning of the year. Statistics from the Society of Indian Automobile Manufacturers showed production of scooters and motorcycles in India down 15.7 percent in October from a year ago.

While some car makers have delayed the development or launch of new models because of the global industry crisis, Alfa Romeo, Fiat’s sports car brand, said it will go ahead next year with the launch of the 149 hatchback as the successor to its 147 saloon.

Alfa Romeo Chief Executive Luca De Meo said the launch will take place despite Fiat temporarily halting production because of a dramatic cut in demand.

“The 149 is confirmed for the fourth quarter (of 2009),” De Meo said at the Bologna Motor Show.

Government moves

Meanwhile, as speculation swirled over the fate of U.S.-owned Volvo Cars and Saab Automobile, the Swedish government indicated on Wednesday it did not believe the state should own car companies.

Ford, which owns Volvo, and General Motors, owner of Saab, are looking to sell the units. Both parents have held talks with the Swedish state.

“I think the taxpayers must be completely clear on the fact that it is a risky project to use their money to buy either Volvo or Saab in this situation where the losses are as big as they are,” Sweden’s deputy prime minister Maud Olofsson said.

However, Portugal’s government has announced a 200 million euro ($252.8 million) credit line for auto and car parts exporters as part of a support package to help the industry.

The package, agreed between the government and companies, including Volkswagen AG and Peugeot Citroen, includes 70 million euros for training for some 10,000 employees and incentives aimed at boosting sales of new cars.

There was also encouraging news from the U.S. where a top lawmaker predicted Washington would approve a multi-billion dollar bailout for automakers General Motors Corp and Chrysler LLC.

U.S. House Speaker Nancy Pelosi, a California Democrat, said Washington had little choice about helping the automakers, who say they support one in 10 American jobs.

“I believe that an intervention will happen either legislatively or from the administration,” Pelosi said. “I think it’s pretty clear bankruptcy is not an option.”

The Detroit automakers are seeking $34 billion in loans and credit lines, far more than the $25 billion they failed to secure in November.