Car makers cut back across the globe
24 October 2008

Car makers are unveiling drastic cutbacks as the collapse in the new car market accelerates.

Chrysler CEO Bob Nardelli has announced plans to slash Chrysler’s white-collar workforce by a quarter between now and the end of the year. Around 4500 jobs will be cut via voluntary redundancies and "buy outs".

In an email to employees, Nardelli described the current economic climate as "truly unimaginable times for our industry".

Chrysler also announced plans to close its SUV factory in Delaware a year early and cut a production shift at the Jeep plant in Toledo. Around 1800 jobs will be lost as a result.

Meanwhile, the talks between General Motors and Chrysler owner Cerberus are reportedly "intensifying" as Cerberus looks to end its short experience of car making.

Any merger of GM and Chrysler is likely to involve government aid and could see as many 30,000 jobs cut over the next 12 months.

As part of the negotiations, Cerberus is in the midst of buying Daimler-Benz’s stake in Chrysler. When Daimler sold Chrysler in 2007, it retained a 20 per cent share of the new company.

However, the purchase is unlikely to be a costly operation. A Daimler finance boss has been quoted as saying the 20 per cent shareholding is now regarded as "worthless" in the Germany company’s accounts.

Meanwhile, in Europe both Peugeot-Citroen announced plans for "massive" cuts in production and Renault ordered temporary closures of up to a fortnight at all its plants in France and a number of overseas facilities.

Peugeot predicts a 17 per cent fall in new car sales in the last quarter of 2008 and Renault is looking to cut production by 20 per cent in the final quarter. Both companies want to avoid stockpiling unsold vehicles.

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Comments
14

25 October 2008

So if the car industry is in so much trouble, where are all the deals to tempt us consumers back into the market ? I must concede that I haven't looked very hard but I don't see them. Anyone else seen anything juicy ?

25 October 2008

[quote]Breaking news: Car industry faces meltdown[/quote]

Breaking news? Really? It's almost as if a serious world wide economic downturn was taking place.

25 October 2008

I don't know about here, but in the states GM is offering cashback of up to $5500 (£3500) to try and clear unsold 2008 stock.

The Pug garage I pass on the way to work has signs up offering massive discounts. So does the Citroen garage, but they they always offer massive discounts so there's nothing new there. The other brands seem to want to wait until you are in the door to offer a deal, which may have worked last year but not now. Whatever they are doing it clearly isn't enough.

What i am wondering is what will happen next year. There must be tens of thousands of people out there who would have bought a car this year but haven't because of the "R-word". When we come out the other side will there be a massive glut of people wanting to replace their old motor? Even if that's true can Chrysler last that long?

25 October 2008

Chrysler, in its current form at least, have no future. They'll be taken over and their brand portfolio rationalised further. Plymouth have already gone the journey and I can't see much point in persisting with Chrysler and the Dodge brands for much longer. Their biggest problem is the products are largely terrible. I had a Jeep Grand Cherokee as a hire earlier in the year and it was dreadful, I mean really very bad. Then look at those awful looking saloons the offer over here. The Charger and 300c are interesting products but now getting on a bit and the SUV money spinners have fallen a long way out of fashion. They need to invest in products but if news from Cerberus is correct they're doing much the opposite.

26 October 2008

Over supply greed and poor products thats the car industries problem at the moment. Need to shake it all up and let some of them go bust. Who gives a toss what theyve done in the past. This is now and what they currently produce is whats matters.

26 October 2008

Oversupply is a definate problem, barely a month has gone buy for the last 5 years where a manufacturer hasn't talked about growing their volumes by 20% and massively increasing market share. They set themselves up with vast break even points which means they can't cope with a downturn. This is made worse by their desire to sell 50 different types of car, each with massive fixed costs.

A recession will sort the wheat from the chaff and some are bound to fold. The european and japanise makers generally make good products that people want, but the American manufacturers have product lines still geared up for the late 90s and I just don't see how Chrysler in particular can survive.

can't say I care about them being greedy though. they are profit making companies (or they were), not charities, so they are allowed to focus on making money. As long as they are competative about it, and try to make money by tempting consumers with better products, then so much the better.

26 October 2008

Explain the term 'Meltdown'. Or has Autocar just borrowed this armaggedonish term from the 'Daily Mail'?

Part of the lack of confidence in the markets at the moment are caused by misplaced statements like this.

26 October 2008

For years Ford and GM were described as banks with a car company attached - maybe they should get bailout?

26 October 2008

Stephen, I'm afraid for once this is not journalistic hyperbole. It, 'meltdown', conveys the mental image of a thing or system losing form, becoming completely not what is was, massively accelerated entropy if you will. One could quibble about the metaphor not being sufficiently literal, yes, as a non-producing car plant and sales distribution channel chock full of non-selling vehicles obviously tends to rust, inertia and decay rather than meltdown, especially in a wet British climate, with snow forecast for the coming week with all its attendant salting and gritting, just adding to the aggravation of storing completed vehicles and yet to be assembled components. Wasn't there a situation going back to the last major recession in America, 1992?, where Chrysler was charged with passing off up to years old cars as new? Maybe such a thing will come back.

Anyway, latest sad and bad news, for those directly affected, and ultimately whole nations' economies, is that today, the German newspaper, Frankfurter Allgemeine(Sunday edition), is reporting that Daimler is to halt production for five weeks over the Christmas period, from Dec 12th to Jan 12th. The Germans in particular are not hanging around with this demand fall-off, They're immediately cutting back production levels, in order to at all cost prevent massive build up of unsold vehicle inventory. I suppose as premium, prestige image vehicle-makers they have to protect the appearance if not the fact of almost total customised, built-to-order production rather than pile 'em high, sell 'em 'cheap', build-to- inventory makers.

The interesting case in the UK is JLR. Yes they have done some cutting back here and there, no Friday working, which is only 5 out of 37 hours in a worked-week, and some other downtime at Halewood and Solihull plants. But I for one cannot believe that they are not being hit as hard as the six German makers, who have all now announced and are implementing drastic production cutbacks. I say watch this space. As a Yank would say, the next shoe to drop will be drastic cutbacks at JLR. The parent company Tata is itself in major difficulties. The Indian stockmarket is plunging and Tata Motors is in desperate need of refinancing its extremely expensive bridging loans.

27 October 2008

Okay, so here's the question - if Chrysler does go under, or get merged into GM and effectively closed, will we in the UK even notice? I'm sure GM will carry on making Jeeps (or rebadging and rebodying its own equally crude body-on-frame SUVs) - but would anyone really care if Chrysler and Dodge disappeared forever from British roads? It's America's version of MG Rover: are we sure that Kevin Howe hasn't got a job with Cerberus?

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