Crunch watch Dec 08: the auto industry in crisis

By Tim Pollard and Simon Stiel

31 December 2008 14:05

Wednesday 31 December 2008
• GMAC, GM's finance arm, said it would immediately revise its criteria for providing loans, after the US government bail-out of the General's credit arm. It will now supply credit for anyone with a score of 621 or more on the Fico scale, the scale used to assess Amercian customers' creditworthiness (Financial Times)
• The news means that 80% of US consumers would now qualify for a loan from GMAC – which should improve sales in the depressed US market (Detroit News)
• Chrysler is being lambasted for taking out full-page adverts in the American national press thanking the nation for supporting its auto industry. But critics point out this is a fresh waste of bail-out resources, as pages in the Wall Street Journal – one of the titles in which the ad ran – reportedly cost up to $264,000. Note to CAR's commercial people – we should learn from these rates! (Autoblog)

Tuesday 30 December 2008

• BBC Two's Top Gear television show will be forced to scale back on its expensive stunts and foreign filming locations for the next series, according to executive producer Andy Wilman (The Telegraph)
• Billionaire investor Kirk Kerkorian has sold his remaining shares in Ford Motor Company, having once amassed a 6.5% stake in the Blue Oval worth $995m (Detroit Free Press)
• Japanese cars sales for 2008 are projected at 5.11m – the worst since 1980 – according to figures from the Japanese Automobile Manufacturers Association. Thing will get worse in 2009, with a predicted drop to 4.86m sales, the lowest figure for three decades (Detroit Free Press)
• The US government is making the final arrangements to transfer the first part of emergency federal loans to GM and Chrysler (Automotive News, subscription required)
• GM will receive a further $1bn in aid (in addition to the $13.4bn the US government has promised it by mid-February 2009), while the US Treasury Department will now purchase $5bn in equity from GMAC (Automotive News, subscription required)

 

Monday 29 December 2008
• It's not all bad news. There are auto makers out there doing very well for themselves. Take Porsche. Just before Christmas, it announced that its profits had exceeded its revenues – with pre-tax gains of €8.57bn ($12bn), up 46% (Financial Times)
• Tub thumping time. Detroit News columnist calls on northerners to boycott Alabama and southern states which house many of the overseas car makers' factories in the US (Autoblog)
• GMAC, GM's car finance business, is negotiating with bondholders to swap $38 billion (£26bn) in debt for GMAC equity. This is crucial if it is to become a bank holding company – giving it access to the US Government's $700bn bank bail-out fund as well as the ability to issue government-guaranteed debt (The Times)

Friday 26 December 2008
• Stricken Ssangyong won't be helped by the South Korean authorities – unless parent company China's SAIC produces a viable bail-out too. Cash-strapped Ssangyong has idled its plants and not paid staff for three weeks (Financial Times)
• General Motors' credit arm, GMAC LCC, has won Federal Reserve approval to become a bank holding company. The change gives it access to US government lending programmes for financial institutions – and means GM and Cerberus have both reduced their stakes. GM did own 49% and will lower that to less than 10%, while majority holder Cerberus holds 51% but will control less than 14.9% of voting shares (Automotive News, subscription required)
• Oil prices this week slipped back below $40 a barrel (BBC News)
• Akio Toyoda, the 52-year-old grandson of Toyota's founder, is tipped to become the new president of Toyota in 2009 (Automotive News, subscription required)

Thursday 25 December 2008
• Christmas Day... a brief lull in the chaos in the auto industry around the world. All CAR's thoughts go to those who are affected by the change and anyone whose job is in jeopardy...

Wednesday 24 December 2008
• Chrysler's turnaround plan is 'reasonable and achievable' says chief exec Bob Nardelli in an internal memo (Automotive News, subscription required)
• GM is going through its heritage collection in Detroit and selling off minor or little used cars (Automotive News, subscription required)
• Toyota president Katsuaki Watanabe is expected to stand down in 2009. Is it linked to Toyota's recent poor financial performance, or the ailing health of current chairman Fujio Cho whom Watanabe is tipped to replace? (Wall Street Journal)
• Toyota commits to staying in F1 – even if it has to reduce the largest budget in the sport, rumoured to be $445 million a season (Autoblog)
• GM, Chrysler and Ford have been stunned by the political and PR backlash to their appeal for state aid. All three are now furiously spinning the story through PR, new websites and social media campaigns (Financial Times)
• Honda is considering moving its HQ outside Japan to thwart the rise in value of the yen compared with the dollar and Euro (Autoblog)
• Subaru has delayed 'indefinitely' the UK launch of the Impreza diesel because of the soaring value of the yen (Autocar)

Tuesday 23 December 2008
• Financial Times' Lex column on the current cashflow turmoil at Jaguar Land Rover: 'The truth is that Tata Motors overpaid for a trophy asset at the top of the cycle and must now nurse it through a particularly severe slump in demand.' (Financial Times)
• Korean car exports stutter; world's fifth-biggest car maker Hyundai-Kia cut production and freeze wages (Financial Times)
• Toyota could cut up to 15% of its UK workforce after yesterday's announcement that it will go into the red for the first time since 1941 (The Times)
• 'General Motors' equity may be largely if not entirely wiped out as it complies with the restructuring targets laid out in the U.S. auto bail-out' (Automotive News, subscription required)
• Michigan blamed the slumping Detroit auto industry as an exodus of 46,000 left the area in 2007-08. The state predicts its population will fall below 10 million next year (Detroit News)

Monday 22 December 2008
• Toyota today warned it would post its first-ever operating loss in the wake of the financial crisis. It blamed falling sales and a surge in the value of the yen (Financial Times)
• Toyota expects to lose 150 billion yen (£1.1 billion) in operating profits – down from a 2.27 trillion yen profit in 2007 (