Carmakers cut output as sales fall

ixus

Carmakers cut output as sales fall

European new car sales dropped by a quarter in November, data showed on Tuesday as more vehicle makers announced output cuts and the Big Three U.S. players waited for the government to throw them a lifeline. Skip related content

Company name 	Last price 	Percentage change
ACEA----	9.37	-------+0.10
FORD MOTOR CO-	3.18	–
FIAT-------	5.15	+0.09
GEN MOTORS	4.08	–
RENAULT---	17.68	-----+0.39
VOLVO -B-	-----39.30	+1.00
VOLKSWAGEN	307.85	+1.40

Volkswagen's Spanish car maker Seat and world number two truckmaker Volvo became the latest companies to announce temporary production halts in response to falling sales as the global economic slowdown batters the industry.

Governments are rushing to support car manufacturers struggling to cope with falling sales and difficulties shifting their stocks of unsold vehicles.

On Monday, France said it was ready to take action following a meeting with top industry executives in return for commitment to keep production in the country.

In the U.S., the Bush administration could act as early as Wednesday to approve an automaker bailout from its bank rescue fund, with conditions likely to reflect at least those approved by the U.S. House of Representatives last week, key lawmakers and other sources said on Monday.

European new passenger car registrations dropped 25.8 percent year-on-year according to the ACEA industry body on Tuesday, the seventh consecutive monthly drop.

ACEA said the last time registrations fell so notably was in 1999 and in 1993, before EU enlargement, when the data only covered the 15 EU member states plus the European Free Trade Association countries.

November's data referred to the 27 EU member states, plus the EFTA countries and excluded Malta and Cyprus, ACEA said.

BIGGEST FALL SINCE 1993

In Western Europe, registrations were down 26 percent to a total of 854,698 new vehicles in November. ACEA said around a million fewer cars were registered in Western Europe in the period from January to November.

In November, Ireland was worst hit, with a 55.9 percent fall, while Spain's sales fell 49.6 percent, the UK 36.8 percent and Italy 29.5 percent.

Sales in Germany were down 17.7 percent - the steepest fall since December 2007. France's sales dropped 14.1 percent.

Among the major European manufacturers, Germany's Volkswagen recorded a 17.4 percent drop in European sales in November, France's PSA Peugeot Citroen saw a 26.9 percent fall, Renault 21.8 percent and Fiat 23.8 percent.

Separately, Seat said it will further cut production at its main plant in Catalonia in the first half of 2009 in response to diving sales. The maker of the Ibiza and Leon said that between February 2 and June 30 it would halt work at its Martorell plant near Barcelona for between seven and 29 days on various production lines.

And the decline is not just in passenger cars as truck sales also fell, leading Volvo to stop production for 20 to 25 days in the first quarter of 2009.

whiterebel

Audi are takig a longer Christmas break too. 3 weeks instead of two, AFAIR.

R.O.R

AFAIK Audi aren't restarting production after Christmas until Week 4. I'd say they aren't the only ones delaying restarting production.

ixus

European Automakers Dispute Assumptions
......A telling issue is that European car manufacturers, who in theory ought to welcome the elimination, partial or complete, of competitors, are instead very worried about the way damage to the Big Three could hurt them. From the New York Times:

Ferdinand Dudenhöffer, director of the Center for Automotive Research in Gelsenkirchen, Germany, warned that the indirect effect of a potential G.M. collapse for American parts makers would be severe. He added that German manufacturers in the United States, like Mercedes and Bayerische Motoren Werke, the maker of BMW cars, would have to rethink not just their American supply chains but their global ones as well.

“There would be no winners, only losers,” Mr. Dudenhöffer said. “This would create a huge mess around the world.”

Both G.M. and the Ford Motor Company were profitable in Europe last year and in the first half of 2008. But neither of their European operations is large enough to survive on its own, said Graeme Maxton, an economist who has long tracked the car industry.

“They’d need a parent of some sort,” Mr. Maxton said.

Other automakers may be reluctant to assume that role, given the slack sales of European giants like Renault, Fiat and Daimler. The tight credit markets would also inhibit any large deals.

“Two drowning men clinging together don’t make a good swimmer,” Mr. Maxton added.


Recall that the reason that an automaker bankruptcy is problematic for parts-makers is that they are unsecured creditors, and do not get paid until the Chapter 11 process would be complete, which one analysis says would not take place before late 2010. Even if a special facility could be devised to keep parts-makers on life support, that adds more taxpayer-borne cost and complexity to the Chapter 11 scenario.

And per the comments above, this is not a good time to be trying to unload car brands or manufacturing operations. The other big automakers all have their own survival worries.

Nevertheless, some options are under consideration. Back to the article:

Mr. Dudenhöffer said the image of Opel, G.M.’s German subsidiary, is suffering among German consumers because of bankruptcy speculation, and suppliers could become nervous if the talk persists.

Because of this, many analysts say they are skeptical that Opel can survive as an independent company if G.M. seeks bankruptcy protection. A more workable solution might be to combine G.M.’s entire overseas business, they said, which would produce roughly three million to four million cars annually.

-Chris-

R.O.R wrote: »

AFAIK Audi aren't restarting production after Christmas until Week 4. I'd say they aren't the only ones delaying restarting production.

Nope, week 3 restart according to my info!

R.O.R

AudiChris wrote: »

Nope, week 3 restart according to my info!

Perhaps I'm getting my wires crossed as we've got something going in to week 4 production that should have been produced by now (and a rather unhappy company director)

E92

Even Toyota are scaling back on worldwide production, and they're the world's most profitable car maker.

-Chris-

R.O.R wrote: »

Perhaps I'm getting my wires crossed as we've got something going in to week 4 production that should have been produced by now (and a rather unhappy company director)

I've a car being built in week 3, but it seems like build times are a little longer than usual.

peasant

BMW started their "Christmas holidays" on the 6th of December, MB also has a four week closure

ixus

Volvo reports negative order intake in Europe

Sweden’s Volvo had more cancelled orders in Europe than new ones in October and November as customers continued to postpone their investment decisions due to the uncertain economic environment.

The world’s second-largest truckmaker on Tuesday said global sales dropped 21 per cent in November, year on year. The large number of cancellations resulted in a negative net order intake of 1,800 trucks in October and November at its European division.

Volvo shares were down 1.8 per cent at SKr37.60 in early trading.

The company warned that it would continue to suspend production periodically in Europe in the new year.

“As in the fourth quarter 2008, it will be necessary to implement a large number of stop days in the European industrial system ... during the first quarter 2009, when ... production will be stopped for approximately 20-25 days,” the company said in a statement.

Leif Johansson, Volvo chief executive, had warned in October that the slowdown appeared to be spreading to emerging markets and its orders in North America had failed to recover.

European truckmakers had until last year enjoyed a long boom, driven by demand from construction and hauliers in Western Europe and fast-growing east European markets led by Russia.

One of the few bright spots for Volvo was Asia, where deliveries in November were up 24 per cent from a year ago. It bought Nissan Diesel for $1.1bn last year.

The news came as ACEA, the European car manufacturers’ association, announced that new car registrations in the region fell 25.8 per cent year-on-year in November, declining for the seventh month in a row.

The Irish market was the worst hit, where sales fell 55.9 per cent. In Spain, registrations were down 49.6 per cent, followed by 36.8 per cent in the UK. Sales were down in Italy by 29.5 per cent, in Germany by 17.7 per cent and in France by 14.1 per cent.

According to ACEA data, European sales fell 26.9 per cent at PSA Peugeot Citroen in November, 23.8 per cent at Fiat, 21.8 per cent at Renault and 17.4 per cent at Volkswagen.

ixus

Thanks for the insight lads, I keep track of economic data for trading purposes. I just thought it would be a good idea to post some article son this forum. even if they aren't the cheeriest.

whiterebel

AudiChris wrote: »

I've a car being built in week 3, but it seems like build times are a little longer than usual.

I ordered my A6 a coule of weeks ago, and it wil only be produced week 4. Audi taking Last week in Dec and first two weeks in January. Still expects to have it for 2nd week of Feb though.

-Chris-

whiterebel wrote: »

I ordered my A6 a coule of weeks ago, and it wil only be produced week 4. Audi taking Last week in Dec and first two weeks in January. Still expects to have it for 2nd week of Feb though.

That's realistic, Jan is a 5 week month this year, and it normally takes 2-3 weeks from production to delivery depending whether the car lands in Cork or Dublin.

ixus

Chrysler plants close for a month

The struggling US carmaker Chrysler is to halt production at all 30 of its plants for one month.

Chrysler needs to save money as it waits for the US government to find a way to help the car industry.

A $14bn (£9.4bn) bail-out deal for the industry failed in the Senate last week, raising fears of job cuts and a possible industry collapse.

Chrysler also needs to reduce production to reflect falling demand as the economy stumbles.

Dealers have been unable to sell cars even to people with the confidence to buy them, because they have been unable to take out car-loans.

"As a result of the financial crisis, the automotive market remains depressed due to the continued lack of consumer credit for potential buyers," Chrysler said in a statement.

Job losses

It left open the possibility that the plants would be closed for more than a month.

"Impacted employees will not return to work any sooner than Monday 19 January," it said.

Also on Wednesday, Ford announced it was to extend the normal two-week Christmas shut-down at 10 of its North American plants for an extra week.

Last week, General Motors announced it was shutting down 30% of its North American production.

Chrysler, Ford and General Motors have warned that millions of jobs could be lost if the government does not agree to a package of loans to support the industry.

While 46,000 Chrysler employees will be directly affected by the plants closure, many more Americans whose jobs depend on the big car makers will be watching with great concern, says the BBC's North America editor, Justin Webb.

The Bush administration has said it will act to prevent a disorderly collapse of the car industry, and loans to keep the big three companies in business could be arranged within days, our correspondent adds.

The White House warned on Tuesday that the carmakers would have to make "concessions" to secure the bail-out.