VOL. 123 | NO. 228 | Thursday, November 20, 2008
Ghosn Says Auto Industry Consolidation Likely
By DAN STRUMPF | AP Auto Writer
LOS ANGELES (AP) - Nissan Motor Co. and Renault SA Chief Executive Carlos Ghosn said Wednesday that he expects the current crisis in the auto industry will soon lead some carmakers to consolidate.
Ghosn made his remarks at the Los Angeles Auto Show while the chief executives of General Motors Corp., Ford Motor Co. and Chrysler LLC were in Washington making their case to the House Financial Services Committee for $25 billion in loans to stay in business.
Ghosn said the weakening global auto market that the auto industry is facing will knock out some competitors. He pointed to the U.S. financial industry, which has seen key players recently disappear.
"We're still stuck in a situation where credit is not flowing normally, and the recession that began in the United States is not only deepening but spreading across the globe," Ghosn said. "It's fair to say that no one, no one had predicted how the global economy would be so volatile in 2008."
Both GM and Nissan were reportedly in talks with Chrysler about an acquisition or other combination as U.S. automakers burned up cash because of a sales meltdown due to the U.S. economic downturn.
GM said this month it was setting aside considerations for a "strategic acquisition" to focus on its immediate cash-flow problems, and some analysts said that could give new life to a deal between Chrysler and Nissan-Renault, which would most likely be interested in acquiring certain parts of Chrysler's business rather than the entire company. Nissan already has an agreement with Chrysler to build a subcompact car for the U.S. company.
Ghosn acknowledged that Nissan-Renault had been in talks with Chrysler about an alliance two years ago, but said the talks were inconclusive and suggested a lack of enthusiasm from Chrysler's side was to blame.
"We are not convinced that any alliance can take place if there is no mutual appetite," Ghosn said. "If you're in a situation where someone is excited about something and the other is skeptical, it's not going to work. Alliance is like marriage."
While the auto industry's situation is most distressful in the U.S., where October sales fell 32 percent to their lowest rate in 25 years, foreign companies also are starting to see sharp sales decreases because of the global economic slowdown.
Nissan and its Japanese rivals, including Toyota Motor Corp. and Honda Motor Co., have cut their production plans to better match demand and have slashed their profit estimates for the year.
Ghosn said the way for automakers to survive is to focus on cash flow in the near term and work toward producing zero-emission vehicles in the long term. He encouraged automakers to forge partnerships with local and national governments to build the infrastructure needed to power zero-emission cars.
To that end, Ghosn announced a partnership Wednesday with the state of Oregon and Portland General Electric Co. to promote and develop an electric vehicle charging network.
"Together, we are creating conditions that will encourage consumers to consider an electric vehicle as an attractive choice that is also good for the environment," Ghosn said.
Nissan, the third-largest Japanese automaker, has said it plans to introduce plug-in electric vehicles in the U.S. in 2010 and mass market them globally two years later.
The Los Angeles Auto Show opens to the public Friday after two days of media previews, but GM and Chrysler aren't unveiling any new models. GM had planned to unveil its new Buick LaCrosse sedan but scaled back its presence to focus on the company's financial problems.
Detroit's automakers are begging Washington for a federal rescue after GM and Ford reported burning through a combined $14.6 billion in the third quarter. GM has said that it may not have enough cash to survive into next year, and the situation for Chrysler appears similarly dire.
Chrysler is still expected to offer the Los Angeles crowds their first glimpse of the company's electric vehicle concepts, including a Jeep and a minivan that can go 40 miles on battery power before a small engine extends their range.
The Auburn Hills, Mich., automaker has vowed to put one of the vehicles in showrooms by 2010, the same year GM plans to start selling its Chevrolet Volt plug-in.
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