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Wednesday, October 14, 2009

Tough Challenges for the Auto Industry but Good Times are Ahead

GM Daewoo has decided to stop production at all its manufacturing facilities from Dec. 22 until Jan. 4 next year. The work stoppage stems from the deterioration of exports along the global economic slowdown.

Chances are that GM Daewoo plants that roll out SUVs and mid-sized sedans, whose sales have fallen sharply, will be closed for the whole month of December. Renault Samsung, in the meantime, is rumored to stop production soon. Dark clouds hanging over the global automobile industry are at the present gathering over Korea.

The Big Three U.S. automakers -- GM, Ford and Daimler Chrysler -- are already unable to carry on operating without government help. Toyota, the world’s biggest automaker, saw its first-half sales fall 6.3 percent from on-year, while operating profit dropped 54 percent. After laying off 3,000 non-regular workers so far this year, Toyota plans to let go another 3,000 before the end of this year and cut down production by 400,000 vehicles. Other Japanese automakers, including Nissan, are getting prepared to lay off workers and cut production.

Several experts believe that if automakers overcome this crisis, the international automotive industry will take off again. The projections come from potentially gigantic demand from emerging economies that will replace advanced countries, whose markets are drenched. Brazil, Russia, India and China accounted for a sum of 10.27 million automobiles, which was less than 60 percent of the 17.47 million sold in the United States. This year, the BRICs markets are anticipated to go beyond the American market by 10 percent. Demand for cars in the world's advanced countries has been declining 0.2 percent every year since 2000. But demand in rising countries has risen 12.9 percent.

But the chance will be offered only to those automakers that survive this crisis. And there would be a boom in auto industry by 2012.Executives with Korean automakers and their unionized workers must understand the real conditions in the global auto industry and show iron determination. And the government has to keep a close eye on the American and European auto industries and look for ways to support domestic automakers and their suppliers.

posted by All America Auto Transport @ 4:41 AM permanent link  

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