Abstract
The future of two major US carmakers looks increasingly uncertain after
viability plans submitted to the
government failed to secure the aid they
were looking for. At the end of March, General Motors (GM)
was given 60
days to step up its restructuring efforts after CEO Rick Wagoner was asked to
leave, while
Chrysler LLC has half that time to secure a tie-up with
Italy' s Fiat. On the upside, a bounce in March' s
sales figures has brought
the annualised rate for 2009 further in line with BMI' s forecast in its latest
US
Automotives Report. This was achieved by record incentives to the tune
of US$3,169 per vehicle.
In other positive news, the supplier segment has
been thrown a US$5bn lifeline from the Department of
the Treasury. Its
Supplier Support Program will provide guarantees for outstanding supplier
debts. An
industry source quoted by Automotive News has said that the
US$5bn covers around 45 days of supplies,
which represents a standard
payment cycle. The Treasury said that suppliers will gain access to the
funds
by selling receivables to the government for a fee. On the downside,
the aid is nowhere near the
US$18.5bn that suppliers associations have
been asking for since December. Moreover, in the short to
medium term,
suppliers should be braced for further slumps in vehicle production. BMI
forecasts further
declines to below 8mn units by 2012.
Despite its
current crisis, the US currently ranks second in BMI' s Business Environment
Ratings for the
Americas, on 63.9 out of a possible 100. The US has a
negative forecast in terms of output and sales
growth. While this is
testament to the extent to which the market has developed its potential, it
also
reflects the limits that carmakers operating in the US are currently
facing. As a developed market,
however, it scores highly for its country
structure and transparency of business.
The uptick in March sales does not
reflect a turnaround in the fortunes for either the industry or individual
carmakers. GM, Chrysler and Ford Motor registered respective declines of
44.7%, 39.3% and 40.8% that
month. GM and Ford, following the lead of
South Korea' s Hyundai, have introduced schemes to cover
loan payments for
customers facing redundancy. The company could prove to be a well-chosen
role
model. On the back of this Hyundai Assurance Plan, sales for March
and Q1 in total were respectively
down by 4.8% y-o-y and up by 0.5%. Its
South Korean affiliate, Kia Motors, also registered a strong
performance,
with sales down by just 0.6% in March and up by 1% in Q1.
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