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Steve Parker

Steve Parker

Posted: November 24, 2008 11:22 PM

Eleven Other Countries with Big Auto Industry Problems


What this post does, I hope, is create awareness of how huge and crucial the car-making business is throughout the world. Here's some of what's happening (mostly with GM) in Europe and Asia, two markets outside the U.S. hit hardest by the slowing automobile business:

1- Poland

General Motors has been making informal approaches to the Polish government for financial help. Officials in Poland also are bracing for huge job losses, maybe as many as 10,000 in their auto sector. Suppliers in Poland are likely to be hit hard because most of their products are exported to western Europe, where production and sales are falling sharply as a result of the global economic slowdown. Renault dealerships will remain open in Warsaw (more on that below).

2- Belgium

GM is also having informal discussions with the Belgian government in Brussels about receiving financial assistance for keeping GM facilities in that country open. Also, the vice chairman of GM's union said he was speaking to GM management in Belgium about approaching the Belgian government for funding to support the carmaker's plant in Antwerp. He said the talks focused on pushing forward GM's Antwerp factory production start date for a Corsa-based small SUV, which has been postponed by a year to 2012. An investment of €100 million (USD $127,000,000) to €120 million (USD $152,000,000) will be needed to bring the launch date of the vehicle forward to January 2011.

3- Spain

Another country where GM is trying to open discussions with the government in Madrid to help keep their production facilities in Spain open and producing cars.

4- Great Britain

British Member of Parliament Andrew Miller said there had been contact between GM and the UK government. He said the talks likely involve support for funding to develop environmentally friendly vehicles. Said Miller: "If the recession continues and it becomes necessary for GM to have financial support in the UK, it is something I would support." Miller represents Ellesmere Port in northwest England, where GM builds the Astra compact car.

5- Sweden

GM has made contact with the government in Sweden, the home country of GM's Saab brand. Jan-Ake Jonsson, Saab managing director, said both Saab and Volvo have talked with the Swedish government. He declined to say whether Saab has asked for money or loan guarantees in the talks (yeah, GM buying Saab really worked out well for both parties).

6- Germany

Germany is home to GM's biggest European brand, Opel. Discussions and meetings there between the government, suppliers and GM management have been fast and furious. On November 17, GM Europe President Carl-Peter Forster, Opel Managing Director Hans Demant and Klaus Franz, chairman of Opel's works council, met with Germany's Chancellor Angela Merkel in Berlin. Franz said Opel had to assume that its cash flow would be frozen if GM applied for Chapter 11 bankruptcy protection in the US. "At the moment we're solvent, but we need a state guarantee to refinance our investments," he said, referring to 20 new models GM Europe plans to introduce by 2012.

7- Hungary

Renault has pulled its company-owned dealer network out of Hungary and plans to do the same in the Netherlands by year-end. The decision is part of the carmaker's bid to focus its Renault Retail Group (RRG) in about 25 major urban centers across Europe. "The majority of Renault Retail Group's sites should be located in large cities, where real estate is expensive and it is difficult for independent dealers to operate," RRG General Manager Gilles Messier told Automotive News Europe. Hungary is also home to many supplier companies in the automotive sector.

8- Czechoslovakia

Thousands of supplier jobs could be cut in central Europe as the global slowdown in auto production hits the region. "It could be 10,000 jobs as a worst case scenario," said Jiri Kyncl, a spokesman for the Czech auto association, SAP. Suppliers in the Czech Republic are also, like those in Poland, likely to be hit hard because most of their products are exported to western Europe for use in car-making plants which are cutting production. "We will be cutting jobs. It could go to about 10 percent," said Petr Gabriel, the finance director at Belis, a maker of pressed metal components that employs 150 people at a plant in Ceske Budejovice, 150km south of Prague.

9- France

Home to Renault/Nissan, the company already has closed about 60 dealerships since 2007 as part of leader Carlos Ghosn's austerity program. At the same time, the group has reinforced its presence in key urban areas. It opened new showrooms near Bordeaux in France; near London and Liverpool in the UK; in Zaragoza, Spain; in the Czech capital of Prague and the Polish capital of Warsaw. Renault wants its company-owned dealerships to control a minimum 75 percent of brand sales in the urban areas where it is present.

10- China

In China, carmakers are asking for government assistance, but they don't want cash to bail them out; what they seek are new rules, regulations and some protection for their sector of the economy, according to Business Week. That support, they say, could come in the form of subsidies for technology development, easier-to-meet standards and better protection from intensifying competition; in other words, some good old-fashioned protectionism!

11- Japan

Japan is officially in a recession and most all Japanese carmakers have slowed production of most models. In the U.S., Japanese and Korean "captive imports" have also cut back on production. Japan has an interesting way to "prime the pump" for their home market carmakers, though. Every year, Japanese car-owners must bring their prides-and-joys to an approved testing facility for an expensive and nit-picking inspection. Since chipped paint or a dented bumper is enough to keep a car or truck off the road, many people get tired of paying big bucks for these inspections, and wind up buying a new car. The non-passing cars are sent to Southeast Asia and sold as used cars. This also explains, for those of you who have visited Japan, why almost every car on the road appears to be in showroom condition.

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