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Global crisis 'far from over'

2008-12-15 06:54

Paris - Top European car makers warned of a bleak 2009 as signs grew the deep crisis in the auto sector went far beyond the U.S industry's life-or-death struggle.

The heads of Renault-Nissan and Fiat said the car market would decline further next year after steep sales drops pushed the US Big Three to ask for the bailout that was rejected by Congress and prompted White House action.

The world's largest carmaker Toyota Motor Corp was set to report a loss of about 100 billion yen ($1.11 billion) for October-March, according to Japanese media on Saturday, and is expected to cut its earnings forecast again.

German premium car maker BMW, which also sells Mini cars and Rolls-Royce limousines, is putting up financial aid to its German dealer network for at least 100 million euros ($132.7 million), according to WirtschaftWoche weekly.

Daimler aims to cut costs at Mercedes-Benz by 10-15 percent in 2009, a German weekly said.

Pressure may also be renewed if OPEC ministers meeting on Wednesday cut output sharply, as expected. A renewed rally in petrol prices at the pump will mean further misery for the global car sector which employs 50 million people. The car industry has been floored by a combination of high energy and raw material prices as well as a blow to consumer confidence from the financial crisis.

German weekly Automobilwoche said Europe's biggest car maker Vokswagen would discuss cost cuts on Thursday while Europe's biggest car parts firm Robert Bosch plans to cut up to 2 000 jobs to save costs in the downturn.

"I do not see a rapid issue to the crisis in the automobile industry," said Carlos Ghosn, chief executive at French maker Renault and its Japanese ally Nissan Motor.

His comments were carried by the Le Figaro and La Tribune newspapers. "We have not touched the bottom yet," he added.

Liquidity needed

Ghosn said the crisis was above all financial and the sector depended a lot on credit."If the financial markets remain what they are we will all be having problems," he said.

French President Nicolas Sarkozy has summoned Ghosn and Christian Streiff of PSA Peugeot Citroen for a meeting on Monday after he had promised to help the sector if makers promised not to transfer any jobs abroad. Renault, PSA and car parts group Faurecia are shedding several thousands of jobs in France and elsewhere in Europe as they cut output.

Ghosn said the authorities understood the seriousness of the situation and he expected concrete action in the coming weeks.

"The state has to provide liquidity, we have already cut our investment plans for 2009," he said. Car makers asked for 40 billion euros in European aid.

Ghosn said the current situation was much more serious than the crisis of 1992-1993, which took five years recovery time. Renault had a debt of 2 billion euros at end 2007 and is keeping a close eye on stocks of unsold cars, which drain cash. "If the stocks rise by 30%, the debt doubles," he said

Fiat head Sergio Marchionne, who last week predicted only six carmakers would survive in the long run from the current 50, said in La Repubblica that 2009 would be the most difficult year he had ever seen in his life.

Milano Finanza newspaper said Italian Prime Minister Berlusconi and Sarozy discussed a tie-up of Fiat with Peugeot Citroen, which would give them critical mass.


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