World auto industry reshuffles amid crisis
- Source: Xinhua
- [09:06 June 03 2009]
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The USgovernment has injected more than 20 billion US dollars into Detroit's Big Three. The Canadian government has provided around 3.3 billion dollars to subsidiaries of General Motors, Ford and Chrysler in Canada. And as GM and Chrysler could not manage stay above water, an organized bankruptcy was pushed and directed by the government. The US and Canadian governments will own a combined 72 percent stake in the new GM once it emerges from bankruptcy.
One day before GM's court filing, the German government agreed to lend Opel, GM's European subsidiary, 2.1 billion dollars, to pave the way for the acquisition of the company by Magna International Inc., a Canadian auto parts supplier.
FACE-OFF GAME
The bankruptcy filed by GM, once the largest automaker and largest company in the world, has marked a new era in the world's auto industry.
Japanese car makers are well-positioned for steady steps through the crisis. Due to slow sales of its Tundra pickup, as well as shortages of its fuel-efficient vehicles such as the Prius, Corolla and Yaris, Toyota has seen sales falling at two digits. In response, the company has announced plans to idle its truck plants, while shifting production at other facilities to manufacture in-demand vehicles.
What's noteworthy is the rise of Italy's Fiat SpA, once seen as aging, sick and outplayed. GM signed a joint-venture agreement with Fiat in 2000 under which GM acquired a stake in Fiat Auto. But when Fiat tried to sell GM the company, GM chose to pay a penalty of 2 billion dollars and annulled the agreement.
But under the management of Sergio Marchionne since 2004, Fiat turned around and saw its first profit in 17 quarters in fourth quarter of 2005. The success of the Grande Punto model, Bravo (successor to the Stilo) and the award-winning 500 have further cemented it.
Fiat has formed a joint venture with India's Tata Motors and China's Chery motors. It has also re-entered several large markets that it had exited years before, such as Mexico and Australia.
Fiat is determined to return to the US market by 2010 with the new 500. Though it lost in the bid for GM Europe's Opel, it will, once the US bankruptcy judge approves, get a 20 percent stake in Chrysler and can become the majority owner once the government loans are repaid.