Chrysler, the country's third-largest auto company, filed today for Chapter 11 bankruptcy protection under a plan that President Obama said will give the troubled automaker "a new lease on life."
"I have every confidence that Chrysler will emerge from this process stronger and more competitive," Obama said at a noon press conference, adding, "This is not a sign of weakness, but rather one more step on a clearly charted path toward Chrysler's revival."
Chrysler, one of the three pillars of the American auto industry, filed for bankruptcy this afternoon after last-minute negotiations between the government and the automaker's creditors broke down yesterday. U.S. officials had offered Chrysler's secured lenders $2.25 billion in cash if they would agree to writedown the $6.9 billion in secured debt that the company owed. But a small group of hedge funds refused the 11th-hour deal.
An administration official this morning expressed disappointment, saying the holdouts had failed to "do the right thing," but that "their failure to act in either their own economic interest or the national interest does not diminish the accomplishments made by Chrysler, Fiat and its stakeholders, nor will it impede the new opportunity Chrysler now has to restructure and emerge stronger going forward."
"I don't stand with those who held out when everybody else is making sacrifices," Obama said at the White House today.
Shortly before the president's remarks, a group claiming to represent the holdouts on the deal released a statement claiming that they had been "systematically precluded" from direct negotiations with the government in favor of creditors who had previously received assistance from the government.
Chrysler chief executive Robert Nardelli announced today that he will return to Cerberus Capital Management as an adviser.
"Now is an appropriate time to let others take the lead in the transformation of Chrysler with Fiat," said Nardelli in a statement. "I will work closely with all of our stakeholders to see that this new company swiftly emerges with a successful closing of the alliance."
The company's bankruptcy filing, and the U.S. government's attempt to save it, amounts to another extraordinary intervention in the economy and a landmark event in the history of the American auto industry.
Under the administration's detailed plan for a "surgical bankruptcy," ownership of Chrysler would be dramatically reorganized, the leadership of Italian automaker Fiat would take over company management and the U.S. and Canadian governments would contribute more than $10 billion in additional funding.
Company and government officials had feared that a bankruptcy would stain the brand, shake customer confidence and erode sales, but the administration said it would seek to use the process to create a new Chrysler company. Its ownership would be divided, with the company's union retiree health fund receiving a 55 percent stake, Fiat would claim as much as a 35 percent share and the United States would take 8 percent. The Canadian government would receive two percent.
The automaker's current majority owner, the private-equity firm Cerberus Capital Management, would have its holdings wiped out.
During the bankruptcy, the governments would provide $4.5 billion in new funds, with 80 percent coming from the United States and 20 percent from Canada, which hosts a number of Chrysler operations. As the company emerged from its reorganization, the United States and Canada would provide another $5.63 billion, the sources said. The U.S. funds come from the government's Troubled Assets Relief Program.
http://www.washingtonpost.com/wp-dyn/content/article/2009/04/30/AR2009043001639_pf.html
Showing posts with label cars. Show all posts
Showing posts with label cars. Show all posts
26 March 2009
Japan exports halved: carmakers seek help
Leo Lewis, Asia Business Correspondent and Christine Buckley, Industrial Editor
Japan's trade with the rest of the world took what economists described as a “horrific” nosedive in February, with imports and exports plummeting by their sharpest monthly margins on record as the world stopped buying Japanese goods.
With vehicle and electronics sales in dramatic decline across developed and emerging markets, Japanese exports were halved. The 49.4 per cent year-on-year plunge in February marked the fourth month running of record export declines. Imports were down by more than 40 per cent.
Japan's car industry trade body said that this year could produce the worst sales figures for 32 years. The Japan Automobile Manufacturers Association (Jama) expects an 8 per cent fall in sales this year, after a 12 per cent decline last year. It is seeking government help to boost the Japanese market, the third-biggest in the world.
Yet in spite of the tide of bad news for Asia's biggest economy, some analysts believe that Wednesday's figures contained flickers of hope and offered evidence that Japanese companies were responding properly to the crisis.
Exports fell hard, but the rate of increase in that decline was far smaller than in previous months. The massive inventory overhang, which cast such a dark shadow over Japan's economy, may be starting to fade, Richard Jerram, a Macquarie economist, said.
For the first time in five months, Japan clawed back a trade surplus in February. It hit only 82.4 billion yen (£578 million), but that was a significant reversal of the Y957 billion deficit in January.
Much of that was the effect of the retrenchment going on among Japan's largest manufacturers, analysts in Tokyo Mitsubishi UFJ said, referring to a battening-down of the hatches that has caused imports to fall at an unprecedented pace.
Japanese companies, once seen as making corporate decisions at tortoise speed, have responded to collapsing international markets with a ferocity and decisiveness that few thought possible. Big carmakers have stopped production, shifts have been reduced in electronics factories and staffing has been cut in many sectors.
Japan's car market has been hit hard by the global contraction in motor sales. However, the market has been suffering a milder decline for three years amid a population shift to cities, which have good public transport.
Jama is hoping for a boost to the market from legislation expected to be passed next week to encourage motorists to buy low-emission vehicles. Satoshi Aoki, Jama's chairman, said: “With the Japanese economy weakening and the outlook for employment looking very uncertain, consumers are in no mood to buy a car.”
Jama is pushing for wider incentives, possibly such as the scrappage bonus operating in Germany and France. This offers an incentive for buying a new car. Mr Aoki said: “We need to prop up demand further on a broader basis. Germany's system could be one guide and we want to seek help from the Government.” Germany's new car sales rose 21 per cent in February.
link
Japan's trade with the rest of the world took what economists described as a “horrific” nosedive in February, with imports and exports plummeting by their sharpest monthly margins on record as the world stopped buying Japanese goods.
With vehicle and electronics sales in dramatic decline across developed and emerging markets, Japanese exports were halved. The 49.4 per cent year-on-year plunge in February marked the fourth month running of record export declines. Imports were down by more than 40 per cent.
Japan's car industry trade body said that this year could produce the worst sales figures for 32 years. The Japan Automobile Manufacturers Association (Jama) expects an 8 per cent fall in sales this year, after a 12 per cent decline last year. It is seeking government help to boost the Japanese market, the third-biggest in the world.
Yet in spite of the tide of bad news for Asia's biggest economy, some analysts believe that Wednesday's figures contained flickers of hope and offered evidence that Japanese companies were responding properly to the crisis.
Exports fell hard, but the rate of increase in that decline was far smaller than in previous months. The massive inventory overhang, which cast such a dark shadow over Japan's economy, may be starting to fade, Richard Jerram, a Macquarie economist, said.
For the first time in five months, Japan clawed back a trade surplus in February. It hit only 82.4 billion yen (£578 million), but that was a significant reversal of the Y957 billion deficit in January.
Much of that was the effect of the retrenchment going on among Japan's largest manufacturers, analysts in Tokyo Mitsubishi UFJ said, referring to a battening-down of the hatches that has caused imports to fall at an unprecedented pace.
Japanese companies, once seen as making corporate decisions at tortoise speed, have responded to collapsing international markets with a ferocity and decisiveness that few thought possible. Big carmakers have stopped production, shifts have been reduced in electronics factories and staffing has been cut in many sectors.
Japan's car market has been hit hard by the global contraction in motor sales. However, the market has been suffering a milder decline for three years amid a population shift to cities, which have good public transport.
Jama is hoping for a boost to the market from legislation expected to be passed next week to encourage motorists to buy low-emission vehicles. Satoshi Aoki, Jama's chairman, said: “With the Japanese economy weakening and the outlook for employment looking very uncertain, consumers are in no mood to buy a car.”
Jama is pushing for wider incentives, possibly such as the scrappage bonus operating in Germany and France. This offers an incentive for buying a new car. Mr Aoki said: “We need to prop up demand further on a broader basis. Germany's system could be one guide and we want to seek help from the Government.” Germany's new car sales rose 21 per cent in February.
link
4 March 2009
More cars sold in China than US
New figures have shown that in December, for the first time ever, there have been more cars sold in China than the United States.
A total of 735,000 automobiles were sold in China last month, compared to 656,976 vehicles were sold in the US.
The reason, analysts say, is that the slump in sales in China has been less severe than the slump in the US - not exactly a cause for celebration for carmakers here.
But the truth is there are worse places to be in the car business than in China at the moment.
It's one of the few places in the world where if you visit a car showroom you'll meet a steady stream of customers.
American appeal
Car buyers like Tang are still attracted to US brands
At lunchtime in one in Shanghai's Pudong district, Tang Liang, a gangly young man is being shown a large family car made by the US firm General Motors and its Chinese partner.
The salesman is assiduous, answering all his questions as Tang jumps in and out of the vehicle, clearly impressed by how it feels to sit in the driving seat.
"We're all quite tall in our family," he says. "Small cars aren't that comfortable."
So why is he interested in buying an American car? "I long for America," he smiles. "Its democracy. Its cars."
He's laughing, but he's not joking. He's impressed by the car.
Above him is a flag with an American eagle.
To those Chinese who can afford them US models are often more attractive than the cheaper, local alternatives, says Wu Ai Lian, the local sales manager.
Her branch sold nearly 1600 cars last year.
"Business isn't bad," she says. "GM has been number one in China for many years. People think their cars use a lot of fuel but we tell them they're safer. Nothing is more valuable than your life. American cars might use more fuel but they're good quality."
Major event
Sales are still holding up, says Wu Ai Lian, manager at a GM dealership
The streets of Shanghai are crammed with cars.
The markets for cars in the bigger cities are well developed.
There are fourteen showrooms selling the same model Tang wants in Shanghai alone.
But across the country, in the smaller cities and in the countryside, it is very different.
Car industry analyst Yale Zhang points out that in the US there are on average 800 cars for every 1000 people.
Here in China the figure's a tiny fraction of that - just 20 per 1000 Chinese.
Mr Zhang says for most Chinese buyers, the purchase of the car is still a major event. "
"Over 80% are buying their first car," he says.
"It's not just a simple transportation tool as it is in the US or in Europe. Here it tells people your social status."
Fast-growing market
China has been regarded as the fastest-growing automobile market in the world, with sales growth of over 20% per year for three years.
But last year growth slipped back to 10% after a disappointing third and fourth quarters.
GM hopes to grow its Chinese market strongly in the next few years
Nowhere is immune to the effects of the economic downturn.
This year sales in China are predicted to slow to just 5% - half of last year's figure.
Kevin Wale, the President of General Motors China, smiles as he admits that the months ahead are going to be "somewhat more challenging."
But he insists that those who've been in the car industry for a long time would recognise that any time you have a growth market is a "good year".
He's not surprised that China is challenging the US for the top spot in car sales worldwide, although he believes it will be "sometime between 5 to ten years" before China outsells the US on a regular basis.
However, higher sales numbers do not necessarily translate into higher sales value in cash terms.
"The value of those sales in the US is on average far higher than the value of those sales in China, so the revenue generated in the US market will be significantly larger than that generated in the China market for quite some time to come," he points out.
Rocky time
Car analyst Zale Yang thinks the next few months will be difficult for many of the smaller players in China's car industry.
"China has enjoyed this more than 20% growth for too long," he says, "and people in the industry have got too used to it."
"If it slows down to single digits, it will add a lot of difficulty for many smaller carmakers in China.
"We have very good reason to expect that by the end of this year or early 2010 we will see some of the smaller manufacturers leaving the industry."
Measures to help manufacturers and motorists have been introduced by the Chinese government in recent weeks.
Among them, the tax on vehicles under with smaller engines (less than 1.6 litres) has been halved to 5%.
And there are subsidies for those who want to exchange an old vehicle for a new one.
Some analysts believe that the stimulus package could boost sales by between 3% and 6% this year.
The government has also promised to provide 10 billion yuan (£980m, $1.4bn) to help carmakers upgrade their technology and to develop alternative energy sources for cars and trucks.
But it acknowledges more help might be needed to support its car industry in the months to come
A total of 735,000 automobiles were sold in China last month, compared to 656,976 vehicles were sold in the US.
The reason, analysts say, is that the slump in sales in China has been less severe than the slump in the US - not exactly a cause for celebration for carmakers here.
But the truth is there are worse places to be in the car business than in China at the moment.
It's one of the few places in the world where if you visit a car showroom you'll meet a steady stream of customers.
American appeal
Car buyers like Tang are still attracted to US brands
At lunchtime in one in Shanghai's Pudong district, Tang Liang, a gangly young man is being shown a large family car made by the US firm General Motors and its Chinese partner.
The salesman is assiduous, answering all his questions as Tang jumps in and out of the vehicle, clearly impressed by how it feels to sit in the driving seat.
"We're all quite tall in our family," he says. "Small cars aren't that comfortable."
So why is he interested in buying an American car? "I long for America," he smiles. "Its democracy. Its cars."
He's laughing, but he's not joking. He's impressed by the car.
Above him is a flag with an American eagle.
To those Chinese who can afford them US models are often more attractive than the cheaper, local alternatives, says Wu Ai Lian, the local sales manager.
Her branch sold nearly 1600 cars last year.
"Business isn't bad," she says. "GM has been number one in China for many years. People think their cars use a lot of fuel but we tell them they're safer. Nothing is more valuable than your life. American cars might use more fuel but they're good quality."
Major event
Sales are still holding up, says Wu Ai Lian, manager at a GM dealership
The streets of Shanghai are crammed with cars.
The markets for cars in the bigger cities are well developed.
There are fourteen showrooms selling the same model Tang wants in Shanghai alone.
But across the country, in the smaller cities and in the countryside, it is very different.
Car industry analyst Yale Zhang points out that in the US there are on average 800 cars for every 1000 people.
Here in China the figure's a tiny fraction of that - just 20 per 1000 Chinese.
Mr Zhang says for most Chinese buyers, the purchase of the car is still a major event. "
"Over 80% are buying their first car," he says.
"It's not just a simple transportation tool as it is in the US or in Europe. Here it tells people your social status."
Fast-growing market
China has been regarded as the fastest-growing automobile market in the world, with sales growth of over 20% per year for three years.
But last year growth slipped back to 10% after a disappointing third and fourth quarters.
GM hopes to grow its Chinese market strongly in the next few years
Nowhere is immune to the effects of the economic downturn.
This year sales in China are predicted to slow to just 5% - half of last year's figure.
Kevin Wale, the President of General Motors China, smiles as he admits that the months ahead are going to be "somewhat more challenging."
But he insists that those who've been in the car industry for a long time would recognise that any time you have a growth market is a "good year".
He's not surprised that China is challenging the US for the top spot in car sales worldwide, although he believes it will be "sometime between 5 to ten years" before China outsells the US on a regular basis.
However, higher sales numbers do not necessarily translate into higher sales value in cash terms.
"The value of those sales in the US is on average far higher than the value of those sales in China, so the revenue generated in the US market will be significantly larger than that generated in the China market for quite some time to come," he points out.
Rocky time
Car analyst Zale Yang thinks the next few months will be difficult for many of the smaller players in China's car industry.
"China has enjoyed this more than 20% growth for too long," he says, "and people in the industry have got too used to it."
"If it slows down to single digits, it will add a lot of difficulty for many smaller carmakers in China.
"We have very good reason to expect that by the end of this year or early 2010 we will see some of the smaller manufacturers leaving the industry."
Measures to help manufacturers and motorists have been introduced by the Chinese government in recent weeks.
Among them, the tax on vehicles under with smaller engines (less than 1.6 litres) has been halved to 5%.
And there are subsidies for those who want to exchange an old vehicle for a new one.
Some analysts believe that the stimulus package could boost sales by between 3% and 6% this year.
The government has also promised to provide 10 billion yuan (£980m, $1.4bn) to help carmakers upgrade their technology and to develop alternative energy sources for cars and trucks.
But it acknowledges more help might be needed to support its car industry in the months to come
21 June 2008
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