World auto industry reshuffles amid crisis
www.chinaview.cn 2009-06-03 01:28:36   Print
A severe crisis has forced the auto industry into a total shakeup.
There was a wave of auto bailout on both sides of Atlantic at the end of last year.
GM's bankruptcy has marked a new era in the world's auto industry.

    By Yang Lei

    DETROIT, June 2 (Xinhua) -- A severe crisis beginning during the second half of 2008 has forced the world's auto industry into a total shakeup, as new players and others compete in a landscape under new rules.

The logo of General Motors Corp. (GM) is seen in front of the GM headquarters in Detroit, the United States, April 15, 2009. The largest U.S. automaker, General Motors Corp., officially filed for bankruptcy protection at 8 a.m. EDT (1200 GMT) on Monday, the largest bankruptcy protection case in the U.S. industrial history. (Xinhua/Gu Xinrong)

The logo of General Motors Corp. (GM) is seen in front of the GM headquarters in Detroit, the United States, April 15, 2009. The largest U.S. automaker, General Motors Corp., officially filed for bankruptcy protection at 8 a.m. EDT (1200 GMT) on Monday, the largest bankruptcy protection case in the U.S. industrial history. (Xinhua/Gu Xinrong)
Photo Gallery>>>

    SWEEPING CRISIS

    2008 has been a difficult year for automakers around the world. An unprecedented oil price rally forced Americans, who drive most in the world, to drive less. And when oil prices took a free fall as the economy hit a downward trend, so did the demand for vehicles.

    With the financial crisis sweeping the world, the auto industry was caught in the credit crunch -- consumers could not get loans to buy cars while the companies faced a shortage of liquidity to keep operating. And as reports of large layoffs were publicized almost on a daily basis, cash-trapped consumers were reluctant to make large purchases like buying a car.

    Car sales dropped to the lowest levels in nearly three decades. Toyota, which replaced General Motors Corp. as the world's top automaker, reported an operating loss for the fiscal year ending March, first time in 70 years. Its sales fell 27 percent in the first quarter 2009.

    Car companies from Asia, Europe, North America and elsewhere have been forced to implement creative marketing strategies to entice consumers to purchase vehicles, when many firms are experiencing double digit percentage sales declines. Major manufacturers, including the Big Three -- GM, Ford, and Chrysler -- and Toyota, are offering substantial discounts. Hyundai is even offering to allow customers to return their new cars if they lose their jobs.

    GOVERNMENT RESCUE

    Despite much controversy on whether it is worth pumping taxpayers' money into an industry which many believe is doomed to fail, governments around the world have reached out to their troubled auto companies.

    There was a wave of auto bailout on both sides of Atlantic at the end of last year. In France, the government provided 1.5 billion euros (2 billion dollars) in aid to its struggling automobile industry. In Britain, a rescue package of up to 1 billion pounds (1.5 billion dollars) was offered to the Tata group, Indian owner of Jaguar and Land Rover. Sweden, home of Ford's Volvo division and GM's Saab division, has passed a 3.6-billion-dollar aid package to prevent a collapse of its auto industry.

    The U.S government has injected more than 20 billion U.S. dollars into Detroit's Big Three. The Canadian government has provided around 3.3 billion dollars to subsidiaries of General Motors, Ford and Chrysler in Canada. And as GM and Chrysler could not manage stay above water, an organized bankruptcy was pushed and directed by the government. The U.S. and Canadian governments will own a combined 72 percent stake in the new GM once it emerges from bankruptcy.

    One day before GM's court filing, the German government agreed to lend Opel, GM's European subsidiary, 2.1 billion dollars, to pave the way for the acquisition of the company by Magna International Inc., a Canadian auto parts supplier.

FACE-OFF GAME

    The bankruptcy filed by GM, once the largest automaker and largest company in the world, has marked a new era in the world's auto industry.

    Japanese car makers are well-positioned for steady steps through the crisis. Due to slow sales of its Tundra pickup, as well as shortages of its fuel-efficient vehicles such as the Prius, Corolla and Yaris, Toyota has seen sales falling at two digits. In response, the company has announced plans to idle its truck plants, while shifting production at other facilities to manufacture in-demand vehicles.

    What's noteworthy is the rise of Italy's Fiat SpA, once seen as aging, sick and outplayed. GM signed a joint-venture agreement with Fiat in 2000 under which GM acquired a stake in Fiat Auto. But when Fiat tried to sell GM the company, GM chose to pay a penalty of 2 billion dollars and annulled the agreement.

    But under the management of Sergio Marchionne since 2004, Fiat turned around and saw its first profit in 17 quarters in fourth quarter of 2005. The success of the Grande Punto model, Bravo (successor to the Stilo) and the award-winning 500 have further cemented it.

    Fiat has formed a joint venture with India's Tata Motors and China's Chery motors. It has also re-entered several large markets that it had exited years before, such as Mexico and Australia.

    Fiat is determined to return to the U.S. market by 2010 with the new 500. Though it lost in the bid for GM Europe's Opel, it will, once the U.S. bankruptcy judge approves, get a 20 percent stake in Chrysler and can become the majority owner once the government loans are repaid.

Obama says U.S. gov't to invest additional $30 bln to help GM

    WASHINGTON, June 1 (Xinhua) -- U.S. President Barack Obama promised on Monday that the U.S. government will invest additional30 billion dollars in GM, which he was confident will emerge from the bankruptcy protection process quickly. Full story

Fritz Henderson says China will continue to be GM's key partner of business

    NEW YORK, June 1 (Xinhua) -- General Motors CEO Fritz Henderson said Monday that China will continue to be a key partner of business of GM.

    Speaking at a press conference in GM's New York building, Henderson said that GM's venture in China is a critical part of GM, saying its business in China in "growing very fast."

    "Our business in China continues to grow very fast, I should say at torrid pace," he said. "And we are very appreciable of that."   Full story

Iconic U.S. auto giant GM declares bankruptcy

A piece of news about the General Motors Corp. filing for bankruptcy protection is seen on the front page of a newspaper in Detroit, the United States, June 1, 2009. The largest U.S. automaker, General Motors Corp., officially filed for bankruptcy protection at 8 a.m. EDT (1200 GMT) on Monday, the largest bankruptcy protection case in the U.S. industrial history. (Xinhua/Gu Xinrong)

A piece of news about the General Motors Corp. filing for bankruptcy protection is seen on the front page of a newspaper in Detroit, the United States, June 1, 2009. The largest U.S. automaker, General Motors Corp., officially filed for bankruptcy protection at 8 a.m. EDT (1200 GMT) on Monday, the largest bankruptcy protection case in the U.S. industrial history. (Xinhua/Gu Xinrong)
Photo Gallery>>>

    NEW YORK/DETROIT, June 1 (Xinhua) -- In the largest industrial bankruptcy ever seen in U.S. history, General Motors Corp., the top U.S. automaker and once the world's largest corporation, filed for bankruptcy protection on Monday.

    The Detroit-based company, for decades a symbol of American manufacturing supremacy, corporate culture and even lifestyle, filed a Chapter 11 petition to the U.S. Bankruptcy Court for the Southern District of New York early Monday morning.    Full story 

GM decides not to abandon its headquarters in Detroit

    DETROIT, June 1 (Xinhua) -- The largest U.S. automaker General Motors which has filed Chapter 11 bankruptcy will not abandon its headquarters in Detroit's Renaissance Center as part of its restructuring, the Detriot News reported Monday.

    President Barack Obama told Michigan's senior members of Congress during a call Sunday night that GM will remain in the RenCen, despite enticements from the city of Warren to move there, a congressional aide briefed on the matter said. Full story

GM to cut 14 plants by 2012, reaffirming to build small car in U.S.

    DETROIT, June 1 (Xinhua) -- General Motors Corp. announced on Monday that it will close or idle 14 plants in more than two years, just several hours after the troubled carmaker filed for bankruptcy in New York. GM also reaffirmed it will build a small car at one of its U.S. assembly plants as it announced on last Friday.  Full story

GM, hours away from bankruptcy, eyes comeback

    DETROIT, June 1 (Xinhua) -- Many are mourning the iconic collapse of General Motors Corp. as it is just hours away from its bankruptcy filing on Monday. But the once largest company in the world may have been quietly betting on a quick comeback as a leaner automaker.

    As 54 percent of GM bondholders announced their support for a sweetened debt-for-equity offer on Sunday, the GM took another step forward toward a quick exit from bankruptcy protection which the company is expected to file on Monday morning.  Full story

U.S. automaker giant poised for bankruptcy protection

    BEIJING, June 1 (Xinhua) -- The No. 1 U.S. auto maker, General Motors Corp., is poised for bankruptcy protection on Monday as a way to seek a rebirth in the wake of a similar move by its rival Chrysler about one month ago.

    The GM, with a history of more than 100 years, is set to deliver paperwork for its bankruptcy protection at 8 a.m. EDT (1200 GMT), the largest bankruptcy protection case in the U.S. industrial history, said informed sources who asked not to be named.  Full story

GM decides to file Chapter 11 bankruptcy as bondholder deadline passes

     BEIJING, May 31 -- General Motors Corp. president and Chief Executive Officer Fritz Henderson have scheduled a news conference in New York on Monday, when the Detroit automaker is expected to file Chapter 11 bankruptcy, according to media reports Sunday.

    GM's board of directors met for a second day Saturday to make the final decision. The outcome of the meeting could not immediately be determined. GM and the Treasury Department, which has been guiding the Detroit automaker toward a rescue plan that will give taxpayers nearly a three-fourths stake in the company, went into secrecy mode.  Full story

U.S. auto workers' union ratifies GM labor deal 

    DETROIT, the United States, May 29 (Xinhua) -- The United Auto Workers (UAW) union ratified a labor deal with General Motors Corp. on Friday, which will help the largest U.S. automaker to emerge more quickly from a possible bankruptcy.

    The contract was approved with an overwhelming 74-percent vote by its members, the UAW said after a conference at its Detroit headquarters on Friday afternoon. Full story

Special Report:  Global Financial Crisis

Editor: Yan
Related Stories
Home Business
  Back to Top