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World auto industry reshuffles amid crisis

(Xinhua)
Updated: 2009-06-03 09:18

ETROIT -- A severe crisis beginning during the second half of 2008 has forced the world's auto industry into a total shakeup, as new players and others compete in a landscape under new rules.

Sweeping Crisis

2008 has been a difficult year for automakers around the world. An unprecedented oil price rally forced Americans, who drive most in the world, to drive less. And when oil prices took a free fall as the economy hit a downward trend, so did the demand for vehicles.

General Motors Holden car is seen on the production line at the manufacturing facility in Elizabeth in this handout photograph obtained June 2, 2009. [Agencies]

With the financial crisis sweeping the world, the auto industry was caught in the credit crunch -- consumers could not get loans to buy cars  while the companies faced a shortage of liquidity to keep operating. And as reports of large layoffs were publicized almost on a daily basis, cash-trapped consumers were reluctant to make large purchases like buying a car.

Full Coverage:  Global Auto Industry Woes Related readings:  U.S. auto giant GM declares bankruptcy  Gearing up for green auto era  Shandong plans auto behemoth  '09 Auto Engine Tech Seminar to be held in Shanghai  US auto unions make tentative deal with GM, Treasury

Car sales dropped to the lowest levels in nearly three decades. Toyota, which replaced General Motors Corp. as the world's top automaker, reported an operating loss for the fiscal year ending March, first time in 70 years. Its sales fell 27 percent in the first quarter 2009.

Car companies from Asia, Europe, North America and elsewhere have been forced to implement creative marketing strategies to entice consumers to purchase vehicles, when many firms are experiencing double digit percentage sales declines. Major manufacturers, including the Big Three -- GM, Ford, and Chrysler -- and Toyota, are offering substantial discounts. Hyundai is even offering to allow customers to return their new cars if they lose their jobs.

Government Rescue

Despite much controversy on whether it is worth pumping taxpayers' money into an industry which many believe is doomed to fail, governments around the world have reached out to their troubled auto companies.

There was a wave of auto bailout on both sides of Atlantic at the end of last year. In France, the government provided 1.5 billion euros (US$2 billion) in aid to its struggling automobile industry. In Britain, a rescue package of up to 1 billion pounds (US$1.5 billion) was offered to the Tata group, Indian owner of Jaguar and Land Rover. Sweden, home of Ford's Volvo division and GM's Saab division, has passed a 3.6-billion-dollar aid package to prevent a collapse of its auto industry.

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