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Crunch watch Feb 09: the auto industry in crisis

Mon, 02 Mar 2009 00:00:00 -0800

By Tim Pollard, Ben Pulman and Ben Whitworth

Motor Industry

02 March 2009 18:11

Monday 2 March
• The Volkswagen Group announces a 5% rise in sales revenues in the 2008 tax year and a 3% increase in operating profits, up to €6.3 billion. Chairman Martin Winterkorn said the group's multi-brand strategy and low CO2 cars had helped sustain sales, although he admitted that 2009 would see a fall in demand and revenues (Volkswagen)

Friday 27 February
• Jaguar Land Rover announces a significant order for 13,000 cars from a Chinese business. It's a morale boost for JLR which has been hit by a slump in demand with the global slowdown (BBC News)
• Opel this afternoon agreed to a restructuring plan designed to save as many jobs and factories as possible – but it needs a €3.3 billion lifeline from the state. GM Europe president Carl-Peter Forster said the idea was to spin off Opel into a separate unit linked to the GM US mothership but with a quarter of the equity owned by outside investors. More soon (Automotive News Europe, subscription required)
• GM is considering a sale of one German factory to Daimler. A decision could be made within weeks (Automotive News Europe, subscription required)
• Liberty Electric Cars invests £30 million into a new EV project in Northumberland, creating up to 250 jobs; it hopes to build a plug-in electric Range Rover (Sky News)
• Nissan has pulled out of many international motor shows, including Frankfurt and Detroit. It is sticking with the likes of Geneva and Tokyo, the car maker confirmed (Automotive News Europe, subscription required)
• An unnamed bidder wants to buy stricken British van maker LDV and switch production abroad (Financial Times)
• GM reacts to yesterday's disastrous results by slashing $800 million from its US marketing spend, including dealer incentives (Automotive News, subscription required)
• GM relied for too long on profits from China, Latin America and Eastern Europe to make up for its dismal US performance. Now the slowdown has gone global, the company is in crisis (Detroit News comment)
• How bad is it at GM? It lost $104 a day in the last quarter of 2008 (The Times)
• Ford says it has enough cash to survive 2009, even if US sales fall to 9 million vehicles for the year (Automotive News, subscription required)
• Digby Jones, the former head of the Confederation of British Industries, said the recession had exposed 'fundamental weaknesses' at LDV as he compared the stricken van maker to failed UK general store Woolworths (Birmingham Post)

Thursday 26 February
• General Motors announces a staggering full-year net loss of $30.9 billion in 2008. GM officials admit its auditors are studying whether there is 'substantial doubt' it can continue as a going concern (Financial Times)
• GM Europe was responsible for $1.6bn of the loss in 2008, suffering a sudden slowdown towards the end of the year (Automotive News Europe, subscription required)
• Saab was forced to shut down production yesterday while it ironed out customs and supplier payments (Automotive News, subscription required)

Wednesday 25 February
• Ford chairman Bill Ford and chief exec Alan Mulally have agreed to cut their salaries by 30% this year (Financial Times)
• Could Mercedes buy struggling Opel/Vauxhall? One Detroit blogger thinks so (Detroit News)
• Three interested parties are expected to place formal bids for Volvo Cars by Easter. A Swedish newspaper claims two Chinese car makers – Dongfeng Motor Group and Chongqing Changan Automobile – and a European business (Automotive News, subscription required)
• Execs from Chrysler and GM are preparing to meet Obama's new administration this week, as officials decide whether to grant billions more in aid or push the two troubled car makers into bankruptcy (Financial Times)
• Chrysler's three top execs are actually meeting the Obama officials today. He is pleading for $5 billion in additional funding, on top of the $4bn they've already received (Detroit News)
• Japan's car exports have crashed by nearly 70% this year (Autocar)

Tuesday 24 February
• The Swedish government is set to guarantee a loan for Volvo Cars, according to reports in Scando financial daily Dagens Industri. The car maker is set to ask the European Investment Bank for a 5 billion kronor loan ($573 million) (Automotive News Europe, subscription required)
• Stricken UK van maker LDV has been told it won't be helped out by the UK Government. It had requested £30 million in emergency loans (BBC News)
• It emerges that LDV, owned by Russian business Gaz, is the auto maker named last week by unions as being days from the brink. It employs 900 people in Birmingham, and some 6000 throughout the supplier network
• Daimler says it is open to offers for its 19.9% stake in Chrysler. Finance director Bodo Uebber said: 'If an interesting offer were made to us, then we would not wait for our remaining stake to become valuable again. There is no right of first refusal for Cerberus' (Automotive News Europe, subscription required)
• Lawyers representing the US Treasury are preparing for possible bankruptcy protection for GM and Chrysler. It's one of numerous scenarios being planned for (Financial Times)
• Investing in R&D is key to ensuring Jaguar Land Rover's survival. Group engineering director Bob Joyce revealed that a system such as Land Rover's Terrain Response cost £8.5 million to develop (Birmingham Post)

Monday 23 February
• VW starts its first short working week for 26 years. Seven plants in Germany have scaled back production today, affecting 61,000 workers (Automotive News Europe, subscription required)
• The German government today distanced itself from any cash rescue package for Opel. Economy minister Karl-Theodor zu Guttenberg said it could not be relied upon for aid. 'The plan is up to the company. The state cannot take charge of this' (Automotive News Europe, subscription required)
• GM execs were taken by surprise by Saab's bankruptcy declaration on Friday. A GM spokeswoman confirms that it 'had no advance word about the timing of the filing' (Automotive News Europe, subscription required)
• Saab will continue to trade normally, it claims, with GM and the Swedish government providing some support
• Saab's reorganisation will be concluded in three months – at which time we'll know if the company is viable, requires further investment or moves into liquidation (Automotive News Europe, subscription required)
• The Swedish restructuring will need approval from Saab's creditors, who meet on 6 April. 'Today is the beginning of a new chapter in Saab's history,' says Jan Ake Jonsson, Saab's managing director. 'Even though we have not been actively searching for new partners, we have had many knocking on our door showing interest in Saab' (BBC News)
• Honda is to name Takanobu Ito, 55, as its new president and CEO. He will replace 64-year-old Takeo Fukui in June 2009. Ito is currently head of global automotive operations (Automotive News, subscription required)
• British van maker LDV is asking the UK Government for a £30 million emergency loan to fund a management buy-out. The company is threatened with closure owing to a collapse in van sales (Financial Times)
• The US president's auto rescue task force are in deep water after it emerged that of the 18 members, only two own American cars (Detroit News)

Friday 20 February
• Saab starts bid for independence, as it files for 'reorganisation'. It means GM's outpost has technically declared itself bankrupt under Swedish law, but the reorganisation process will allow protection from creditors as it develops a plan for a streamlined, independent Saab to emerge. • Saab could be independent within six months
• Saab's bankruptcy protection proceedings 'could spark a domino effect in Europe' (Financial Times)
• Unite union leader Tony Woodley opens a can of worms by claiming that a UK car plant that employs more than 6000 people may be forced to close within days. No names are named (BBC News)
• Apologies for slow coverage on Friday – our process in the office fell through as our news team were on the road!

Thursday 19 February
• Swedish government rules out a state takeover of Saab. Industry minister Maud Olofsson is 'deeply disappointed' that GM chief exec Rick Wagoner admits Saab could be forced to file for bankruptcy by the end of the month unless the Swedish governments steps in. 'What GM says is that they wash their hands of Saab and drop it into the laps of Swedish taxpayers,' Olofsson says  (Automotive News, subscription required)
• General Motors says it is considering selling an equity stake in Opel and Vauxhall (Financial Times)
• Ford insists it has no intention of calling for loans. Blue Oval chief exec Alan Mulally says: 'Nothing has changed about our plan. Our plan is not to access government money. Right now, with everything I see, we have sufficient liquidity to continue our transformation of Ford' (Detroit News)
• GM disbands its sports car division as part of its cost-cutting. All staff at the High Performance Vehicle Operations in Detroit have been posted on to other projects (Automotive News, subscription required)
• A brace of new Alfa Romeo badges are revealed in Chrysler's Viability Plan: the next-gen 147 will be called the Milano, while the 159 successor will be badged Giulia. The names were revealed in documents relating to Fiat-Chrysler proposed alliance (Autoblog)

Wednesday 18 February
• General Motors admits it is considering closing 'several' plants in Europe – especially in 'high-cost locations' – as part of its drive to save $1.2 billion in Europe (Automotive News Europe, subscription required)
• GM plans an enormous 47,000 further job cuts, Chrysler 3000 (BBC News)
• Decision on Saab 'could be taken this month'
• GM CEO Rick Wagoner confirms Opel is talking to the German government for aid. But he admits no buyers have approached GM to buy Opel/Vauxhall
• Wagoner predicts Saab will be spun off into an independent business from 1 January 2010. 'Somebody needs to come in and take over the business in the near term'
• GM surprises many by asking for a further $16.6 billion in federal aid to help it survive. It submitted its plan to the Treasury department on Tuesday as part of its restructuring submission required before it can qualify for state help. Without the new cash injection, it could run out of cash some time in March. GM today receives the last instalment of a previously approved $13.4bn loan, and the new requests would help it repay revolving lines of credit falling due. GM said it would start to repay loans in 2012 (Automotive News, subscription required)
• There has been no immediate news on GM's plans for its Saturn, Saab and Hummer brands. Each is under review, pending closure or sale
• Chrysler asks federal government for an additional $2 billion and spells out how it will turn around its ailing business. Chrysler announces plan to cut fixed costs by a further $700m, slash 100,000 more production capacity, discontinue three more model lines and sell $300m more in assets. All part of wide-ranging presentation to Congress. It also spells out how the proposed alliance with Fiat is central to its turnaround plan (Automotive News, subscription required)
• GM argues that even the new, swollen bail-out proposal would be cheaper than letting its business slide into bankruptcy (Financial Times, subscription required)
• Some good news in Detroit: the Big Three have reached 'tentative agreements' with the Big Three over cost-cutting concessions to their 2007 national labour deals. However, talks continue as they negotiate on retiree health care funding (Detroit News)
• GM is seeking a further $6bn in financial support from overseas governments – in Germany, the UK, Sweden, Canada and Thailand. GM revealed its plan to trim $1.2bn in savings from its European operations; one scenario would see its cut four of its nine Euro factories, putting Ellesmere Port in the UK at risk (Wall Street Journal)
• Chrysler boss Bob Nardelli explains his turnaround plan to senior Chrysler managers yesterday in the video below

• Check out the Big Three's previous video spelling out why a bail-out is preferable to bankruptcy in our player below

 

Tuesday 17 February

 

Monday 9 February 2009
• In response to nose-diving sales Nissan has announced that it will slash its worldwide workforce by 8.5% – a massive 20,000 jobs – that will bring its headcount down to 215,000 over the next 12 months. The news came as the company said it expected to make a £2 billion loss for its current financial year and will, as a result, be suspending its 2008-2012 mid-term business plan, Nissan GT 2012. It also plans to reduce labour costs this financial year by 20%, to £5.15billion


By Tim Pollard, Ben Pulman and Ben Whitworth