Several items of interest have been reported in the last few days regarding the auto industry. Here are a few of them:
Nissan projects huge losses, job cuts
The Big Three American automakers are not the only ones suffering from financial woes; the Japanese automakers are in a similar situation. Nissan had huge losses in 2008 and is planning significant job cuts in 2009:
Nissan hasn’t posted an annual loss in nine years, but the automaker is poised to take a big hit on its 2008 earnings, and like the rest of the industry, it is scrambling to restructure. The Japanese carmaker is expected to report a $2.9 billion shortfall, prompting Carlos Ghosn and his team to chop 20,000 jobs – fully 8.5 percent of its employees worldwide. Some of the job losses will be arrived at through early retirement packages and the ending of temporary worker contracts, but most will be out-and-out layoffs.
Toyota loses top credit rating
Toyota is scarcely in better shape than Nissan. For the first time in five years, the Japanese automaker has had its credit rating downgraded in the financial markets:
Moody’s Investor Services has lowered its credit rating for Toyota from the top-level Aaa to Aa1 and given it a “negative” outlook. Toyota had maintained Aaa status since 2003. The automaker, recently crowned as the largest in the world, is currently dealing with what must be the worst crisis that the Japanese company has ever faced since its inception in 1937. In what is decidedly uncharted territory at Toyota, the automaker saw its global sales fall by 4% last year and it is widely expected to post its first-ever loss – a whopping 150 billion yen ($1.65 billion) – over the full year ending in March. The worst bit of news, though, is that there’s no light at the end of the tunnel. Sales figures are not expected to improve in the coming months, which could very well lead to another loss next year according to industry experts.
Delphi asks court to end their responsibility for retiree health care
Delphi, the auto parts giant that spun off from General Motors 12 years ago, is asking the judge overseeing their bankruptcy proceedings to void its contractual commitment to provide healthcare for their retired employees:
The supplier has filed paperwork with the court asking for permission to end health care benefits for retirees that had been salaried employees. This move could be made as early as April, after which current Delphi employees would no longer be eligible for health care benefits after retiring. If approved, Delphi says this move would save $70 million per year and free up over a billion dollars in liabilities.
It seems like there’s no end to the bad news from the auto industry.