Global car crisis far from over

PARIS (Reuters) -- Top European car makers warned of a bleak 2009 as signs grew that the deep crisis facing the auto sector went far beyond the U.S industry’s life-or-death struggle.

The heads of Renault-Nissan and Fiat said the car market would decline further next year after steep sales drops pushed the U.S. Big Three to ask for the state bailout, which was rejected by Congress.

The world’s largest carmaker Toyota Motor Corp was set to report a loss of about 100 billion yen ($1.11 billion) for October-March, according to Japanese media on Saturday, and is expected to cut its earnings forecast again.

Top premium carmaker BMW, which also sells Mini small cars and Rolls-Royce limousines, is putting up financial aid to its German dealer network for at least 100 million euros ($132.7 million), according to the Wirtschaftswoche weekly.

Pressure may also be renewed if OPEC ministers meeting on Wednesday cut output sharply, as expected, and manage to reverse the sharp fall in oil prices.

A renewed rally in petrol prices at the pump will deal further misery to the global car sector, which employs 50 million people directly and indirectly.

The car industry has been floored by a combination of high energy and raw material prices as well as a blow to consumer confidence from the financial crisis.

"I do not see a rapid issue to the crisis in the automobile industry," said Carlos Ghosn, chief executive at French maker Renault and its Japanese ally Nissan Motor.

His comments were carried by the Le Figaro and La Tribune newspapers.

"We have not touched the bottom yet," he added.

Liquidity needed

Ghosn said the crisis was above all financial and the sector depended a lot on credit.

"If the financial markets remain what they are we will all be having problems," he said, adding the carmakers needed financing at "reasonable" interest rates of 4 to 5 percent for two to three year terms in 2009.

French President Nicolas Sarkozy has summoned Ghosn and Christian Streiff of PSA/Peugeot-Citroen for a meeting on Monday after he had promised to help the sector if makers promised not to transfer any jobs abroad. Renault, PSA and supplier Faurecia are shedding several thousands of job in France to face the sales and output drop.

Ghosn said the authorities understood the seriousness of the situation and he expected concrete action in the coming weeks.

He was named chairman of the ACEA European carmakers association for 2009 and is also set to add the title for chairman at Renault to his business card, which will give him more leeway in strategic decisions about any alliances.

"The state has to provide liquidity, we have already cut our investment plans for 2009," he said.

ACEA has asked for 40 billion euros in European aid and Ghosn said the French funds could be part of that.

Ghosn said the current situation was much more serious than the car industry crises of 1992-1993, which took five years recovery time. Renault had a debt of 2 billion euros at end 2007 and is keeping a close eye on the stocks of unsold cars, which drain cash.

"If the stocks rise by 30 percent, the debt doubles," said Fiat head Sergio Marchionne, who last week predicted only six carmakers would survive in the long run from the current 50, said in comments carried by La Repubblica that 2009 would be the most difficult year he had ever seen in his life.

Although he did not refer directly to possible U.S. aid for its struggling automakers, Marchionne said public assistance for some companies would bring "enormous disparities in international competition."