Slowing China car sales overshadow Detroit show
China posted a sharp fall in 2008 car sales growth on Monday as makers worldwide grapple with slowing demand, including United States giants General Motors and Ford, which are under pressure to shed Swedish subsidiaries Saab and Volvo.
The Detroit car show, which opened on Sunday, is the industry’s biggest marketing event but comes as US companies GM, Ford and Chrysler all look to the government for support to get through the industry downturn.
France is among the European governments expected to take similar steps.
A source told Reuters on Monday that the next government to outline an aid package for car makers could be China, where 2008 sales growth tumbled to 6,7% after three years of expansion topping 20%, according to the official Xinhua news agency.
“The National Development and Reform Commission together with other departments came to a basic agreement about details for the auto and steel plans last week, and these will be discussed at a State Council meeting this Wednesday,” the source told Reuters.
“If approved, they will be announced and implemented very soon.”
China’s proposals include reducing or abolishing a 10% tax on vehicle purchases and incentives for developing cleaner cars, according to state media reports.
China’s biggest car maker, SAIC, owns a 51% stake in South Korean sports utility vehicle maker Ssangyong, which filed for bankruptcy protection last week.
Unions at Ssangyong said on Monday they had won membership backing for a strike as they call on SAIC to rescue Korea’s No. 5 car maker.
Like their Chinese peers, Japan’s steel makers are also feeling the pinch as demand from car makers slows, and analysts say that will show in results due this week from producers led by the Nippon Steel Corporation.
“Auto statistics are getting nasty, meaning some analysts are further downgrading their earnings forecasts for Japanese steel makers after next month,” said Takashi Murata, an analyst at Daiwa Institute of Research.
Looking for buyers
Under pressure to raise cash in the face of slumping sales, GM and Ford said on Sunday they were pushing ahead with attempts to sell Swedish brands Saab and Volvo.
Top-ranked European maker Volkswagen offered a glimmer of brighter news as it eked out a 0,6% rise in 2008 group sales though the result was tempered by an outlook that calls for a slide of about 10% in 2009.
GM chief executive Rick Wagoner, speaking on the sidelines of the Detroit car show, told reporters that GM was still seeking a buyer for Saab.
Ford chief executive Alan Mulally said Ford had been in talks with several potential bidders for its Volvo brand, but he declined to name the parties.
Volvo is the last brand left over from Ford’s former premium car group, which included Aston Martin, Jaguar and Land Rover.
Last year Ford sold its luxury Jaguar and Land Rover brands to India’s Tata.
GM Europe chief Carl-Peter Forster dismissed speculation that a sale of Saab could come before the end of March, when GM must present a restructuring plan.
“You can’t expect to sell a business like this in two months,” Forster said. “It takes a year.”
GM vice chairperson Bob Lutz, who heads up the top US car maker’s product development efforts, said Saab had been a drain on GM for years.
“Frankly they’ve been on GM life support,” Lutz told reporters. “It’s just an unending string of losses and the hope is always with the next generation of products they’ll make money but when you look at the financial results it’s just never happened.”
Brokerages Goldman Sachs and Credit Suisse adjusted ratings for several European car makers on Monday, boosting shares in French maker PSA Peugeot.
British car dealer Inchcape, which issued a profit warning last month, traded lower after saying it was evaluating an equity issue was one of several options to strengthen its financial position. - Reuters