While the fate of the bailout package for America’s big three car groups will hopefully be sorted out soon, there’s more bad news from the sector as factory closures, production cuts and job losses escalate, along with support packages for the sector.
The US government will fund the $US14 billion bailout package from the larger bailout fund agreed to by Congress several months ago after the US Senate killed off the original idea.
But General Motors isn’t waiting; it’s slashing output in the US in the March quarter by 60% as demand continues slumping.
Toyota and Honda are cutting output as well in the US and other markets. Toyota is now reported to be facing a huge March half loss.
And Robert Bosch, the world’s biggest car parts group (it controls Pacifica in Australia) is reported to be preparing to slash jobs in Germany and abroad because of the financial crisis.
In an interview to appear in the next edition of the magazine Auto Motor, CEO, Bernd Bohr refused to give precise figures, while speaking of several hundred jobs affected in foreign plants and "structural adjustment" in Germany
In October the group predicted a "really tough year" in 2009 after results in 2008 fell below expectations, with rising costs and weaker sales growth.
The Stuttgart-based group has already halted some production, eliminated hundreds of temporary jobs and cut working hours.
GM revealed Friday that it is slashing its first-quarter North American production by 60% compared with the same period this year.
GM said it will cut production by an additional 250,000 units during the first quarter due to "ongoing and severe drop in industry sales" by trimming production at 21 North American plants (in the US, Canada and Mexico).
GM had announced in its car revamp plan, released on December 2 that it would produce 600,000 units in North America in the coming quarter, compared with 885,000 in the 2008 first quarter.
"The impact of these and recently announced actions to adjust production with market demand, will result in the temporary idling of approximately 30 percent of GM’s North American assembly plant volume during the first quarter of 2009," the company said in a statement.
GM said the speed and severity of the US auto market’s decline has been "unprecedented in recent weeks" as consumers reel from the collapse of the financial markets and tight credit.
This would put the production schedule of GM, the No.1 US automaker, below that of Ford, which ranks third in US sales behind Toyota.
GM’s market share is 22% compared with about 15% for Ford.
Ford said earlier in December it would produce 430,000 vehicles in North America in the first quarter, down from 692,000 a year earlier. It has not announced any new changes to production at this point.
GM’s US sales fell 41% in November while the overall industry sales fell 36%.
Honda Motor Co also announced late last week it was cutting production in North America.
Honda said it would reduce output by another 119,000 vehicles for its fiscal year ending next March 31, bringing expected production for the fiscal year to 1.3 million units.
Honda said the cuts will take place at five of Honda’s seven plants in the US and Canada. No layoffs will result from the cuts.
Earlier this month, Honda said its US sales fell 32% in November and 5% for the first 11 months of the year.
The company’s latest production cuts come on top of previous reductions of 56,000 vehicles for North America announced earlier in the year. Last month, Honda said it was cutting production in Japan and Europe by 61,000 vehicles.
Toyota is reported to be facing a $US1 billion second half operating loss after sales slumped and the yen rose to a 13 year high against the US dollar on Friday.
Media reports say the loss will force the company to slash its global sales forecast for 2009 by 10% to fewer than 7.5 million vehicles.
It would be the second straight year of declining sales for the Japanese firm after 2008 sales fall 5% to around 8 million units, the first fall for a decade.
Its domestic sales are projected to remain almost flat at roughly 1.45 million units in 2009, but North American and European sales are expected to continue sliding, the reports said.
It would mean Toyota’s operating profit for the year to March 2009 would amount to 420 billion yen at best, more than 80% lower than the 2.27 trillion yen Toyota made in operating profit last year.
Toyota more than halved its profit forecasts last month, saying annual net earnings will plunge to a 9-year low as the financial crisis and recession cuts demand for its cars, access to credit and sends the yen higher.
The Canadian and the provincial government of Ontario have said they will both aid the local businesses of GM, Ford and Chrysler if and when the US government OKs a support package.
The two governments did not say how much aid would be provided; just that it will come.
Canada accounts for about 20% of the production capacity of both companies.
GM has asked for $C800 million in aid from Canada by the end of this month and an additional $C1.6 billion line of credit through the second quarter.
Ford’s Canadian unit has asked for access to as much as $C2 billion in “stand-by” credit, to be used if the current economic crisis worsens. Chrysler hasn’t said how much it’s seeking.
And the Swedish government revealed
