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Volvo Announces Medium Heavy Engine for Trucks

Volvo has been constantly on the news, mostly catering to the trucks needed in the various sectors of business the past days. Now it announces new proprietary medium-heavy engines slated to come out this 2010. With the weakened demand for trucks, the need to cut cost in getting engines from suppliers is evident. Hence, with an in-house production, the issue of inventory storage cost can be addressed as well as deteriorating quality for trucks distribution.

In his presentation, Mikael Bratt, CFO of the Volvo Group, described the measures being implemented throughout the Group to reduce cost levels and improve cash flow. He also said that the Volvo Group has high liquidity reserves despite the sharp economic downturn, and that the company has an advantageous loan structure with few loans maturing in the next two years. Furthermore, with its global presence, the Group has excellent opportunities for raising loans on the capital market.

This measure is seen as something similar to the cost-cutting measures that most auto companies are undertaking these days. And with Volvo being a reliable brand and yet getting the cheap end of demands, wiser management strategies need to be implemented as well.

(Source) Press

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GMAC Receives Government Aid

While the car industry is desperately in a bind, it seems that GMAC is encountering rough sailing as well. But thanks to the support of the US government, help is on the way as the US Treasury is reportedly set to provide additional financial support for the trouble lender.

“It’s likely, again, that GMAC will need to take additional capital from the government and we’ll be prepared to provide that,” Geithner said in an interview with Reuters on Friday. Results of ’stress tests’ released on Thursday showed that 10 of America’s 19 largest banks need a total of $74.6 billion in new capital to boost their cash reserves in the event of a deeper economic slump.

US Treasury Secretary Timothy Geithner said there were signs that the economic downturn was coming to an end. However, he warned that there was still ‘a long way to go’ before the world’s largest economy would have a full recovery. The Treasury has already provided $6 billion in aid to GMAC, which is a vital provider of loans for buyers of US-made cars.

(Source) Press TV

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Toyota Reports $6.9 Billion Loss

Toyota Motors continues its nosedive sales reports and is expecting worst thing to come. With dozens of factories unused, the global downturn is making life easier for the Japan-based car manufacturer, comparing profitable years with a large loss of $6.9 billion in the final quarter.

The world’s biggest automaker reported a January-March operating loss of 682.5 billion yen ($6.9 billion), versus a 396.7 billion yen profit a year earlier but in line with a consensus estimate for a loss of 689 billion yen in a survey of 21 analysts polled by Thomson Reuters.

The global economic downturn that has battered demand for cars and pushed U.S. rival Chrysler [CBS.UL] into bankruptcy has hit Toyota badly as it went from rapid expansion to overcapacity almost overnight.

Toyota posted its first-ever consolidated operating loss last year after a record profit the year before.

(Source) Reuters

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Daimler Feels the Crunch

If there was a company that would not be suffering from the economic downturn, it would be a rare occurrence. Luxury cars are expected to bear the brunt of this down times and Daimler just justified that as they have reported a decline of sales of their Mercedes Benz line.

Mercedes-Benz USA today reported April sales of 14,565 vehicles, a decline of 28.1 percent over April 2008. The volume leaders for the month were the C, GLK, and M-Class with sales of 4,274, 1,869, and 1,838 respectively. On a year-to-date basis, the company sold 54,799 new vehicles, a decrease of 29.7 percent over the comparable period last year.

Year to date sales now total 6,282 units which represents a 2 percent increase versus April 2008 year-to-date sales. Since its introduction in the United States, there are over 30,000 smart fortwos traveling the highways throughout America. The smart fortwo offers the right balance of power, outstanding fuel efficiency, innovative safety features, environmental friendliness and excellent value. There are currently 75 smart centers in 35 states.

(Source) Press

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South Korea Announces Tax Breaks for Old Cars

In a move to help fight recession and entice new car buying, the South Korean government has announced a tax break for all motorists who replace their aging cars. The strategy and finance ministry said the measure, worth up to 2.5 million won (US$1,900), would be available to drivers who trade in a car that is more than nine years old. The incentive, which will run from May to December, was announced as local auto makers feel the bite of the global economic downturn.

South Korean car manufacturers, including Hyundai Motor, have reduced their output due to slumping sales while Ssangyong Motor, the smallest automaker in the country, is under court receivership to avoid bankruptcy.

The tax break will come from reducing purchasing and registration taxes by 70 percent, officials said. They estimated it could potentially affect 548,000 vehicles – 32.6 percent of the total 16.8 million registered in the country.

The government is also considering providing more liquidity to auto finance companies as part of efforts to stimulate demand.

(Source) eTaiwan News

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Volkswagen Staying Put in China Expansion

Despite the hard times and economic downturn, Volkswagen has made it clear that they will be continuing their expansion plans in China. This means that they would go through with the introduction of new models in China despite the not-so good state of the economy.

The Germany-based carmaker plans to increase its production capacity in its largest foreign market this year by about 5 per cent to 50,000 cars, said Winfried Vahland, head of Volkwagen’s operations in China. Vahland described the carmaker as remaining optimistic on this year’s business outlook in China although not as positive as it has been in the past.

Total car sales in China for the first two months of the year grew in the low two-digit range. Volkswagen predicted slight growth in the overall car market in China in 2009.

(Source) VisitBulgaria

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Investment Dar Selling Aston Martin Stake

It looks like Aston Martin will be losing a stakeholder as Investment Dar of Kuwait has reportedly in talks to sell its stake which may end up being under new management. Investment Dar paid Ford over $900 million for its majority stake in Aston Martin back in 2007, but the economic downturn has forced it to reconsider the position.

The group has received several expressions of interest in a stake in the famed marque as a part of the company’s plans to restructure its debt, sources tell the newspaper. Aston’s sales volume in the UK, which accounts for about a third of the worldwide total, fell 25% in the year through October, forcing the company to cut its workforce by one third. Plans for restructuring are expected to be finalized by March 16.

(Source) Financial Times

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Lamborghini Production Slows Down

Another luxury car line has been bitten by the economic downturn bug. Lamborghini, which drew in fantastic sales last year, has announced that they are halting production for two weeks between February and March in light of the weakening economy.

Lamborghini’s production slowdown will affect around 300 members of its 1000-plus workforce, but it has already agreed the move with unions.

“We have established a decade of sales and profit increases, including another record year for deliveries in 2008, but we cannot maintain the previous levels of production during the downturn,” said Lamborghini president and CEO Stephan Winkelmann.

(Source) Autocar

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Nissan to cut 20,000 jobs

As the global economic crisis spreads and deepens, foreign makers are starting to feel the pinch and pull back. Nissan Motors announced this week it will cut 20,000 jobs by the end of March. Nissan CEO Carlos Ghosn said no factories will be shut down, but the job cuts, which amount to about 20% of Nissan’s total workforce, are necessary in the face of a projected $2 billion loss for the coming year. In addition to the 20,000 jobs cuts, Nissan is asking for 1,200 voluntary early retirements. 

Nissan said that most of the cuts will occur in Japan. Shares of Nissan stock have fallen over 70% in the past year alone, hurt by sluggish sales but also by the rise in value of the yen, which has made Nissan’s pricing less competitive in export markets, especially the U.S.  Nissan also holds a 15% stake in Renault, which is experiencing serious debt problems that are pushing it to the brink of solvency.

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Aston Martin Shifts to 3-Day Work Schedule

Similar to other car companies that have been feeling the pinch of the economic downturn, Aston Martin is the latest casualty to give in to hard times as it has reduced factory operations to three days in a week.

The employees’ hours will be “banked” and claimed back by the firm later. The firm, which announced 600 redundancies in December, said it had consulted unions over the move. Three hundred employees have already left and it is in the final stages of consultation over the remaining 300.

The move comes as the government announced a potential £2.3bn tax payer bailout for the industry, which has been badly hit by the recession.

(Source) BBC

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