While America Slept. Saturday, February 21st, 2009

An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. WAS is being filed from Beijing until further notice.

After Saab, will Opel be next? GM’s decision to push its Saab unit into bankruptcy protection puts pressure on Germany, the UK and Spain to come up with funding to save the rest of GM’s European business, Bloomberg reports. Hours after Saab filed for creditor protection, Opel supervisory-board member, Armin Schild, said the Ruesselsheim, Germany-based unit needs a rescue package that may exceed 3.3b euros ($4.23b). GM has set March 31 for deciding on all its European divisions’ future as the carmaker seeks as much as $16.6b in new U.S. federal loans. Saab’s move to seek protection from creditors “creates a sense of urgency” at Opel, said Laurenz Meyer, a lawmaker and economics spokesman with Chancellor Angela Merkel’s ruling Christian Democrats. On the dark side: some members of Merkel’s Christian Democrats oppose government guarantees for Opel. They say Opel won’t operate profitably in the long term because it lacks an effective business model. They’re also worried that aid would go directly to the US. On the bright side: should Trollhättan-based Saab survive a three-month “reconstruction” under court supervision, the Swedish company may play a role in a more independent Opel. As GM’s only European brand with market recognition in the US, Saab could offer Opel a chance to “re-skin” its products for the world’s biggest auto market. On the sinister side: Most European automakers wouldn’t mind Opel fading away.

Opel out of money in May? Opel may not be able to pay its bills as early as May or June, Automobilwoche [sub] says. That’s the conclusion of the credit guarantee committee formed by the German states with Opel factories.

Hillary hearts China: Freshly-minted US Secretary of State Hillary Clinton and Chinese Foreign Minister Yang Jiechi met in Beijing to conduct “high-level talks on economic and strategic issues and pledged to work together to combat the worldwide depression,” Bloomberg reports. The meeting was devoid of any “Buy American” rhetoric– which seems to have been cooked up for internal consumption. Instead, Hillary “thanked China for its continued purchases of U.S. Treasury notes, demand for which is needed to pay for Obama’s $787 billion stimulus plan.” Yang said China, the world’s largest holder of US T-bills, will invest its almost $2t in foreign-currency reserves based on the principles of ensuring liquidity and protecting value. “I appreciate greatly the Chinese government’s continuing confidence in US Treasuries,” Clinton said. “I think that’s a well-grounded confidence.”

Red ink flowing in Japan: Seven major automakers had a combined negative free cash flow of 1.92t yen for the nine months ended Dec. 31, already exceeding levels for all of fiscal 2007 by a wide margin, the Nikkei [sub] reports. The seven firms are: Toyota , Honda, Nissan, Suzuki, Mazda, Mitsubishi Motors, and Fuji Heavy. They expect to sell 18.45m vehicles worldwide in fiscal 2008 (ending March 31, 2009) undershooting initial targets by 3.74m units for a drop of slightly more than 10 percent from a year earlier. The industry faces tumbling profits and swelling inventories as a result. With the sales decline becoming more pronounced in the January-March quarter, their combined negative free cash flow may balloon to 2 trillion yen for the full year ending March 31.

No worries in China: Despite the layoffs and restructuring in the rest of the world, it’s business as usual in Chinese joint ventures. “Employees in their China units have not much to worry on the job front,” Gasgoo writes. PSA is the only foreign automaker which has said it would trim its headcount in China. The other major international auto companies, including Volkswagen, Nissan, Toyota and Honda, all said they would not cut jobs in China although they have decided to trim workforce in other regions. Compared with the sales fall in the US and Europe, analysts believe there would be a slight increase in China’s automobile market this year. In January, China has for the first time topped the US in auto sales, with 735,500 vehicles sold domestically. In contrast monthly sales in the US declined 37 percent in January to 656,693 vehicles.

Survey says: Freep lost it: US customers are blissfully unaware of Chinese cars in the USA, a Morpace survey cited by the Freep says. No wonder, there aren’t any. Says the Freep: “Only 28 percent of consumers surveyed say they have heard about Chinese automakers’ intention to enter the US market, and only 12 percent are willing to consider a Chinese-made vehicle.” Only 12 percent? China would be ecstatic if they would sell 1.2m units a year in the USA.