| Auto industry |
The problems of the auto industry were not created by the financial crisis, though it certainly brought them to a breaking point. For several years now the industry has been under attack for creating fuel guzzling vehicles that have harmed the planet irrevocably.
Rising input costs, a direct result of rising commodity prices, not only saw the cost of making vehicles shoot up, but the rise in oil prices in 2007, and in the first half of 2008, saw the cost of keeping them rise too.
Auto companies have consequently seen a drop in sales and a fall in margins. New technologies, more fuel efficient technologies, greener technologies, have consumed huge parts of the industry’s capital. The financial crisis, on the top of all this, produced severe liquidity problems, bringing auto companies around the world, and those in US in particular, to their knees.
December saw the big three auto companies begging for federal aid to tide over liquidity problem. They did get a bailout of $17.4 billion from the US government in the third week of December. But it is much less than what they had asked for and uncertainty remains on the long term prospects of these companies.
Japan auto industry has seen a loss of nearly 17000 jobs already. The figure may well climb north of 1 lakh. Toyota, Japan’s (and the world’s) largest car maker, saw its share price slide 4% after it announced a fall in its operating profits forecast.
The US big three shut 35 plants between them (computed from 2005), nearly 1,49000 jobs have been lost by the industry in the same period.
The German auto industry, which employs one sixth of Germany’s working population, can see a loss of 100,000 jobs by 2009 end is something drastic is not done. Opel, once Germany’s largest carmaker, has asked for a government loan. Daimler, the maker of Mercedes-Benz plans to cut production of the iconic car by 150,000.
The Chinese auto industry could see a shake out that can wipe off 85% of its companies, one report said.
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