Even harder times hit the US
BY DAVID HASSALL | 28th Oct 2008
The US auto industry is in such deep trouble that Chrysler chairman and CEO Bob Nardelli described it as “truly unimaginable times”.
Holden should be safe for another five years, when the next-generation G8 is due, but auto news service Edmunds reports that the big rear-wheel drive sedan could ultimately go the same way as the Solstice sportscar, for which Pontiac has said there will be no replacement.
While continuing to discuss a potential merger, General Motors and Chrysler are continuing to slash new model programs, production levels and staff.
Chrysler last Friday told employees of a new round of “salaried and supplemental workforce” reductions to take place over the next two months.
The embattled company also announced it will close its Newark assembly plant at the end of this year, putting 1000 employees out of work one year earlier than expected, and at the same time will cut one of its two shifts at the Toledo North plant, at a cost of 825 jobs.
While the Newark closure does not affect Australia because it builds the Dodge Durango and Chrysler Aspen that are not sold here, the Toledo North plant produces Dodge Nitros and Jeep Cherokees for the Australian market.
However, Chrysler Australia spokesman Jerry Stamoulis told GoAuto that the size of the Australian market – combined sales of only 180 a month for the two models – and the overall sales decline here, which has left most companies with excess stock, meant that local supply would not be affected.
“Considering the automotive market in Australia, it really won’t affect us too much,” said Mr Stamoulis. “There might be the odd order that may be delayed, where there might be some odd options requested, but the majority of our cars have minimal options so we don’t see a major affect to customers wanting Nitro or Cherokee models.
“We’ve still got stock coming in and, with the amount of volume that we’re expecting to sell, it will have minimal affect.”In relation to Chrysler’s job-cutting campaign, Mr Stamoulis said that foreign markets have not yet been advised of any changes and that “at this stage it’s business as usual”.
“Being a market that is profitable and being part of a region that is doing extremely well, it would be a surprise, so at this stage we are confident there won’t be any major changes in Australia,” he said.
GM has axed a number of new model programs, including the planned replacements for the Chevrolet Tahoe, Chevrolet Suburban, GMC Yukon and Cadillac Escalade, and reportedly plans to cancel or at least delay more programs.
In addition to the speculation over the future of the G8 program, reports in the US suggest that the Cruze small car – which is expected to come to Australia as an Astra/Viva replacement – has been put back from 2010 to 2011 in a bid by GM to save money.
Both the Cadillac CTS Coupe, which is expected to form a vital piece of the brand’s relaunch in Australia, and the Buick LaCrosse mid-size sedan appear to have been delayed, with scheduled motor show unveilings having been rescheduled from Los Angeles in November to Detroit in January.
GM also told executives last week that it would have to reduce salaried employment by more than the 5000 jobs originally planned and suspend some employee benefits to try and conserve cash amid declining sales.
And the company that was until recently the biggest car-maker in the world has reportedly asked the US treasury for US$10 billion to assist its planned merger with Chrysler. The money is to help pay employee entitlements for workers who will be retrenched as a result of the merger.
Detroit’s Centre for Automotive Research has reported that GM, Ford and Chrysler have announced the shutdown of 35 plants since 2005, but still employ about 230,000 people in the United States.
“These are truly unimaginable times for our industry,” said Chrysler chairman and CEO Bob Nardelli.
“We continue to be in the most difficult economic period most of us can remember. The combination of troubled financial markets, difficult credit, volatile commodity prices, the housing crisis and declining consumer confidence continues to weigh on the economy. Never before have auto industry sales contracted at such a fast rate.”Describing the latest layoffs, Chrysler executive vice-president of manufacturing Frank Ewasyshyn used similarly strong language to describe the situation.
“The markets are facing unprecedented turmoil and we are in a time of historic change in the auto industry,” he said. “These tough but necessary steps are vital to our long-term viability.”Meanwhile, Chrysler has responded to a statement from Daimler that the German company had lost 351 million euro ($727 million) on its 19.9 per cent holding in Chrysler in the second quarter.
Chrysler, which does not have to report its earnings because it is privately-owned, said that differences in accounting standards accounted for about half of the figure and that “Daimler AG adjustments not related to Chrysler Holding LLC” accounts for another quarter.
Although Daimler reported a turnaround in the third quarter – from a 1.5 billion euro ($3.1 billion) loss in 2007 to a net profit of 213 million euro ($A400 million) this year – the German luxury car-maker has lowered its 2008 earnings targets for the second time because of global uncertainty and a drop in sales of 7.4 per cent.
And, in a sign of the times, even new global leader Toyota is taking a hit. Its US sales were down 29.5 per cent in September and the company will reportedly post its first ever operating loss in North America for the first half of the company’s financial year (April to September).
Japan’s Jiji Press wire service said that Toyota would post a first half operating loss of several hundred million dollars for North America, its first since entering the market in the 1980s.
On Friday, Toyota Motor Corp said that its global sales fell 96,000 units, or more than four percent, to 2.236 million vehicles in the quarter to September - its first quarterly drop in seven years.