Trouble for Automobile Industry

The automobile industry all over the world seems to be in deep trouble. Here are some quick facts.

  • General Motors, Chrysler, Ford (Automobile industry in US) These three companies are probably the worst hit. GM had announced last month that it will 'run out of money' in the next two quarters if conditions do not improve. Chrysler has halted production at ALL of its plants. Yes, the keyword here is ALL. This is more than just a simple production cut to cope up with the crisis. It is just matter of time that we here some 'bankruptcy' news from one of the above companies, especially since an attempt to bailout the US automobile industry has failed.
  • Tata Motors, Maruti-Suzuki (Automobile industry in India): Maruti Suzuki has reported a 27% drop in sales in the month of November (as compared to same month last year). Tata Motors is in bad shape for at least two reasons: First) Loss making Jaguar, Land Rover plants. This was simply a bad decision or at best 'bad timing'. To even think of turning these plants into profit making ventures requires more investment, which at the moment does not seem possible. These plants will continue to bleed Tata Motors. Second) Troubles for the long awaited Nano project of Tata Motors are far from over. Protests in gujarat for higher land compensation continue.
  • Honda, Toyota (Automobile industry in Japan): Honda has cut its production in North American units at least twice, slashed salaries of its top-brass by 10%. Toyota has cut output in India by 30%, and is likely to suffer a loss of billion dollars in the current quarter.
Transport and communication is the backbone of any growing healthy economy. Naturally, any economic downturn is going to have a maginified negative effect on the automobile sector. Perhaps the only silver lining for this sector is the dropping crude oil prices.

Dec 18, 2008

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