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Euro auto production forecast cut again

Carlos Ghosn: "We are not at the end of the tunnel."

Ghosn calls for co-ordinated response in Europe as slump deepens

General News logo10 Mar 2009

THE European Automobile Manufacturers’ Association has cut its 2009 production forecast by another 10 per cent, down to an estimated 25 per cent decline from last year.

Only last week, when the European Commission predicted a fall of 18 per cent in auto production, the association reiterated its estimate of a 15 per cent decline.

The escalating forecasts of the production slump came in the wake of the troubles that have gripped General Motors subsidiaries Opel and Saab, and after gloomy statements from other makers.

Association president Carlos Ghosn – also chief executive of Renault and president of its Japanese affiliate Nissan – said: “We are not at the end of the tunnel.

“We are seeing the slide continue,” he said, in a reference to 2008, when output dropped 7.2 per cent and sales dropped 7.8 per cent.

He indicated there was a heavy build up of inventory in the industry. The production fall will comfortably exceed an expected decline in sales of 20 per cent, with the shortfall coming from stock already on grass.

“For the moment, our forecast is 25 per cent. For the moment,” Mr Ghosn said.

“Things are changing all the time. The forecast I gave you today was not the same as the forecast I gave you last week. Last week, it was down 15 per cent.” Mr Ghosn said the only national market in Europe that was up in February was Germany, and then only in the small car class.

“And Germany is up only in one segment, the low segment of the market, which exploded, due mainly to the scrapping incentives,” he said.

“This led the German market 21 per cent up. But if you exclude (Germany) it is 25 per cent down.” Under the scrapping incentives, a new car buyer receives a grant of €2,500 if the car traded in is more than nine years old.

Mr Ghosn called on European Governments to co-ordinate their assistance to the car industry, which he said needed to be around €40 billion ($A79.3 billion).

He called for a unified approach rather piecemeal allocations by national Governments and loans by the European Investment Bank (EIB).

“We don't want only national governments to be taking these kinds of measures, we want also Europe to be stepping in,” he said.

“We would like Europe to take a more proactive stance,” he said. “What we would like is an initiative coming from Europe.” Mr Ghosn said the EIB could not resolve the main issues with its special-purpose loans.

“The EIB today is only based on projects. I mean if you have a project of an electric car, the EIB can finance you. And it's limited to 400 million euros per car manufacturer every year.” Mr Ghosn said more must be done at the European Commission level. He urged the EU to offer general financing to automakers and called for an increase in the limit on EIB project financing from 50 per cent to 75 per cent.

He warned that a longer and deeper recession could lead some European car-makers to face the same troubles as US-based General Motors which is seeking billions of dollars in American aid to avoid bankruptcy.

“If this recession continues, as it is, and if it will continue to deepen, you may see more than what you see today,” he said. “This is a situation that is absolutely not specific to one car manufacturer.”

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