Thursday, October 23, 2008
Carmakers fear hard times ahead
Carmakers have forecast a tough year ahead, as the financial crisis takes its toll on the car industry.
Italian carmaker Fiat said in a worst-case scenario its 2009 profits could fall by 65%, while global demand for its products could drop 10 to 20%.
South Korea's Hyundai reported a fall in third-quarter profits of 38%, but said it should meet most of its targets, though conditions were tough.
Daimler posted a profit for the quarter but said vehicle sales had fallen 3%.
As the global economy slows, consumers are shying away from making major purchases.
Italian gloom
Even though Fiat made clear that its forecasts were a worst-case scenario, analysts took them as a profit warning.
The Italian company added that it believed the "erratic" conditions in financial markets were temporary and insisted they would not affect the "overall substance" of its turnaround target for 2010.
In recent years, Fiat has successfully turned around its business, helped by the revival of the cult Fiat 500 car.
Fiat's third-quarter earnings were better than expected, with profit 8% higher at 802m euros (£632m), a performance it attributed to strong sales of farm machinery.
Korean realism
Hyundai Motor Company reported a 38% fall in third-quarter net profit, which was slightly better than expected.
It expects to sell slightly fewer vehicles - 3.02 million versus an earlier forecast of 3.11 million - this year, but said it should meet other sales and operating targets, in part because of increased demand for more compact cars.
"Demand for smaller cars is rising, although global auto demand is shrinking," said Park Dong-wook, a director at Hyundai's treasury division.
"The market situation in emerging countries is much worse than expected," he added.
Daimler
German carmaker Daimler reported a 213m-euro profit for the quarter, a dramatic turnaround from the 1.5bn-euro loss it saw in the same period a year ago.
Last year's loss reflected "special effects from the Chrysler transaction", the statement said, alluding to Daimler's sale of 80% of Chrysler to Cerberus, a US private equity group, in May 2007.
But Daimler saw plenty of evidence of the impact of the banking crisis on consumer confidence, as sales fell.
Daimler sold 522,500 passenger cars and commercial vehicles in the third quarter, down 3% from the 537,000 sold in the same period last year. Its revenues were 23.8bn euros, down from 25.7bn euros.
"We recognise that the situation is very challenging indeed," said Dieter Zetsche, chairman of Daimler's board of management.
DATED: 23.10.08
FEED: AW
