Michael Shields and Chang-Ran Kim
Reuters
FRANKFURT/TOKYO: General Motors’ move to scrap the sale of its Opel unit and raise forecasts from Nissan Motor Co. lifted confidence in the global auto industry’s recovery on Wednesday. But carmakers were in no mood to take chances and continued to try and push costs lower, with Toyota Motor Corp. announcing on Wednesday it was quitting Formula One motor racing after failing to win a single race.
A year of turmoil has reshaped the auto industry and those relying on it, but at least one major shake-up will now not go ahead.
After months of negotiations, General Motors abandoned the sale of Opel to a group led by Canada’s Magna on Tuesday, saying improving business conditions and the strategic importance of Opel had prompted the decision by its board.
GM Europe said that the plan for Opel included a 30 percent cut in fixed costs but declined comment on possible job cuts and plant closures.
German union and government officials reacted with anger and frustration after agreeing to jobs concessions and billions of euros in assistance to support the sale plan.
“General Motors’ behaviour towards Germany is completely unacceptable,” German Economy Minister Rainer Bruederle told reporters.
GM’s behavior showed the “ugly face of turbo capitalism,” said Juergen Ruettgers, the premier of North Rhine Westphalia where Opel’s Bochum plant lies. Opel labor leader Klaus Franz said the unions would not give in to GM’s “blackmail” to help finance its plans and scrapped a deal made on cost savings.
Automakers around the world have struggled to cope with plunging demand brought on by the global financial crisis, which helped send GM and rival Chrysler into bankruptcy earlier this year.
But a range of government measures to attract buyers has helped revive sales and many automakers have begun raising their forecasts.
Nissan, Japan’s number three behind Toyota and Honda Motor Co., beat expectations with its second-quarter results and raised its full-year forecast, banking on reducing costs and better sales in China.
Nissan, 44 percent-owned by Renault SA, expects an operating profit of 120 billion yen ($1.3 billion) in the year to end-March, instead of the 100 billion yen loss it had forecast.
“It’s a strong showing, demonstrating both Nissan’s ability to manage through the economic crisis as well as the returns from its investments in emerging markets, particularly China,” said Marc Desmidt, COO Asian equities, at BlackRock.
“Having said that, an important factor to watch out for is the sustainability of consumer demand as government stimulus around the world begins to come to an end.”
Nissan’s solid results, after the market close in Tokyo, boosted Renault and other European automakers, which bounced back from a 14 percent selloff over the past two weeks and were the best performers in a strong European market.
Renault rose 4.2 percent, while Fiat was up 3.6 percent and Daimler up 3.8 percent.
“Both Nissan’s outlook and last night’s US figures are indications that things are getting better for automakers,” a Paris-based trader said.
US auto sales hit an annualized rate of 10.46 million units in October, figures from industry tracking firm Autodata showed on Tuesday.
That is a level not seen in a year, except for July and August when the US government’s “cash for clunkers” incentives scheme sparked a surge in sales.
Still, automakers are relying on cost cutting rather than any lasting surge in sales.
Toyota had an estimated annual budget of around $300 million for its Formula One team, which has never won a race since entering the series in 2002. It finished fifth out of 10 teams in this year’s F1 constructors’ rankings.
Honda, which quit the F1 series last December, said on Wednesday it was aiming to break even in Japan using just 70 percent of its capacity to build cars.
Honda last week nearly tripled its annual operating profit forecast for the year to March to 190 billion yen ($2.1 billion), far above consensus projections and despite lowering its dollar rate assumption to 85 yen for the second half from 90 yen.
Germany’s BMW said Tuesday it still saw positive 2009 earnings thanks to cost cuts even as it repeated sales volume was set to fall 10-15 percent.
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