Bailout Watch 182: EU: You’ll Be Hearing From Our Lawyers
By Edward NiedermeyerNovember 14, 2008 -
Quick, what do egregious bailouts have in common with the invasion of Iraq? Sticklers for a little-known concept called “international law” aren’t fans of either. And this time they could actually sue. “We will look very carefully at the details of the proposed aid package to the U.S. auto industry, in order to ensure compliance with international trade rules and assess the potential impact which it may have on trading partners,” Peter Power, trade spokesman for the European Commission told CNN yesterday. The World Trade Organization prohibits a range of subsidies that unfairly hurt competitors, and with pro-bailout rhetoric hitting new heights in “whatever it takes” shrillness, there’s a chance that good intentions will translate into a WTO lawsuit. After all, Europe and the US are already beefing over a number of trade issues, from aerospace subsidies to agriculture. In fact, it’s possible that Bush’s resistance to bailout plans is a result of his humiliating retreat from steel-industry protectionism some five years ago. Then, as now, a struggling industry needed his help, and help he did. Until the EU threatened $2.2b in retaliatory economic sanctions. Sue me once, shame on you…
Posted in Crime & Punishment | Europe | News Blog | 13 comments 
This Is Sick: European Auto (Non-)Sales
By Bertel SchmittNovember 14, 2008 -
Scientists all over the world are in a mad scramble to find a vaccine against the vehicular flu, commonly called “motor malaise.” Now, Europe also finds itself in the grips of the pandemic. Today (Farago beat me to it), the European association of auto makers ACEA released their January through October numbers. Analysts from the automotive anorexia formerly known as America may envy the fact that from January to October, Europe (as defined by ACEA) fell only 5.4 percent to 12.852m units. Taking a closer look, we now know why the EU was so eager to enlarge eastwards. In the new easterly member states, there was at least an ittsy bit of growth, 2.5 percent for the first 10 months. Without the eastern comrades– make that members– the EU would be looking at an even heftier percentage-letting. Have a Maalox, or a stiff drink, and read on, if you dare ….
Posted in Europe | Industry | News Blog | 7 comments
EU Car Market Falls 15%, NY Art Sale Augurs Supercar Collapse
By Robert FaragoNovember 14, 2008 -
Can you believe that GM used to claim that their foreign ops would prop-up the sinking North American market while they got their shit together? I mean, these are the same guys that were busy touting the advantages of a world car. Anyone who doubted that it’s a small world after all should have a gander at October sales stats across the pond [via Bloomberg UK]. “Registrations dropped to 1.13 million vehicles last month from 1.33 million a year earlier, the Brussels-based European Automobile Manufacturers’ Association said today in a statement. Sales for the first 10 months fell 5.4 percent to 12.8 million vehicles, accelerating from a 4.4 percent contraction through September.” And who got whacked the hardest? “GM’s sales in Europe fell 25 percent to 94,479 vehicles, with the Saab brand reporting a 28 percent plunge… Registrations in Europe by Toyota slumped 24 percent to 54,612 cars. Asia’s largest carmaker, leading GM in global auto sales this year, posted a 69 percent plunge in quarterly net income on Nov. 6. Deliveries of its Lexus brand fell 32 percent.” So, that’s the mass market, then. How about the top end?
Posted in Europe | High Finance | News Blog | Sales | 3 comments
Porsche NFSW Watch: Berlin Gives Brussels The Finger, Porsche May Want Rubbers
By Bertel SchmittNovember 14, 2008 -
Yesterday, we reported that the European Commission threatened to drag Germany in front of the European High Court again– if Germany dares to pass a revamped Volkswagen Gesetz (VW Law.) Yesterday evening, the German parliament flipped a whole aviary worth of birds in the direction of Brussels, and passed the face-lifted law with an overwhelming majority. Result for the time being: VeeDub’s soon majority-owner Porsche will have to kowtow to the state of Lower Saxony, owner of a paltry 20.1 percent of the shares. Porsche must ask for their OK on major issues. On one issue, Porsche doesn’t even need to ask. Lower Saxony will say “nein, nein, nein” to Porsche booking VW’s profits as theirs. Und now European Trade Commissar Charlie McCreevy will file papers “before Christmas,” and the contemptuous Bundesrepublik Deutschland will face the judges of the European High Court. Again. The court will rule (anybody guess how?) Germany will have to implement the wishes of the court again (anybody guess whether they will?) The never-ending saga continues. In the meantime…
Posted in Europe | Germany | High Finance | Law and Order | News Blog | Politics | 3 comments
GM and Ford Face EU Suppliers’ “Run on the Bank”
By Robert FaragoNovember 13, 2008 -
The Financial Times reports the run on the bank scenario mooted by TTAC– bankruptcy-wary suppliers demanding cash-on-the-nail for goods and services– may be going down across the pond. “Troubled US carmakers General Motors and Ford Motor have been given a potentially devastating vote of no confidence by three big European credit insurers [Euler Hermes, Atradius and Coface], which have removed cover from their suppliers. The withdrawal of credit insurance – which covered suppliers against the risk of the car companies’ failing – has previously hastened the demise of a string of European companies, with suppliers to retailers and construction companies finding cover increasingly hard to come by.” The FT reports that the move leaves only three possibilities, all them swirling around a bathtub full of Not Good: “GM and Ford can start paying upfront for goods; they can hope their suppliers will trade uninsured; or they could be unable to buy the parts they need for car production.” [Thanks to Uncommon Sense for the link]
Posted in Europe | News Blog | 7 comments
EU Auto Glassmakers Shattered at $1.78b Antitrust Bill
By Martin SchwoererNovember 13, 2008 -
Note to CEOs: if you’re going to meet with your competitors at a clandestine hotel in order to fix prices, make sure nobody in your entourage is a snitch. And if you’ve already received a regulator’s multimillion-dollar fine a few years ago, be more careful the second time, otherwise you’re likely to be fined a cool billion bucks– as France’s Saint Gobain was yesterday. Neelie Kroes, European Commissioner for Competition: “Saint-Gobain, Asahi, Pilkington and Soliver have defrauded the auto industry and consumers for five years. The FT reports that the fines are so punitive because the auto glass industry is large (sales of $3bn/year) and because Saint-Gobain had been involved in a similar incident in the past.”
Posted in Europe | News Blog | Suppliers | 5 comments
GM Deathwatch, German Edition: Cui Bono?
By Bertel SchmittNovember 13, 2008 -
Germany’s industry rag Automobilwoche [sub] is running an interesting ballot. “Who do you think would profit the most if GM goes bust?” (or German words to that effect). The options are kind of odd. Only Ford, Renault/Nissan, Toyota, and Volkswagen are eligible. But keep in mind, Automobilwoche is a German rag. They could have asked “What if Opel would die?” But they didn’t. Do they know more than we do? 846 souls have voted so far.
Posted in Bailout Watch | Europe | Germany | Industry | News Blog | 5 comments
European Sales: Bad is the New Good
By Bertel SchmittNovember 7, 2008 -
Bad news (or, if compared to anorexic America, good news) from J.D. Power: Western European auto sales fell by 15.5 percent to 1,035,243 million units in October from a year earlier, reports Automotive News Europe [sub]. They say, the decline in new-car sales in Western Europe could be worse than a slump in the early 1990s. Contrast that to “the worst sales month in the post World War II era,” which GM’s Chief (Non-) Sales Analyst just saw for his employer in NA. Everything being relative, our relatives in the Old Country still have it relatively good. If J.D.Power’s crystal ball is still functioning, the Western European car market may decline by 8 percent in 2008, and go down between 10 and 11 percent in 2009. J.D.Power came to the not all to surprising conclusion that this would “place major strains on the European auto industry.” As opposed to the end of the world, as if we don’t know it already. Note: As long as VW stock goes for between €500 and €1000, depending what time of day it is, or the whims of Porsche may be, as long as BMW’s owneresse can afford millions to pay a gigolo, the European market will be just fine. All things, considered, of course.
Automotive News Europe [sub] »
Posted in Europe | High Finance | News Blog | no comments
Is Daimler Getting a Hungarian Government Handout? Bailout?
By Justin BerkowitzOctober 27, 2008 -
Despite the five-week holiday Daimler said its German workers will get this winter, the firm is still going ahead with plans to build a €800 million factory in Hungary. The factory is, according to Reuters, meant for “compact cars,” though what they’d be I have no idea. Smart doesn’t need any more capacity (a previous attempt to expand the smart brand was a dismal failure). It’s not as though the expensive A- and B- Class Benzes are flying out of showrooms, either. The original plan: build four compact models at the Hungary plant, including an off-roader, cabrio, coupe, and small van. But that was in June, before everything went to hell. And Mercedes changes its product plans on a weekly basis, anyway. The bigger story is how much the Hungarian government is contributing to the deal, whether in the form of tax credit or just direct subsidies. Hungary’s economy has been in seriously deep trouble in the past six months, with the currency in freefall and interest rates at 11.5 percent in an attempt to help the currency. Just this weekend, the IMF scrambled to bail out the country (this was after the European Central Bank gave Hungary’s central bank an emergency €5 billion line of credit earlier this month). With all this in mind, Hungary’s officials are probably looking to the Mercedes factory as an economic blessing, and Mercedes is likely cautiously optimistic about the low value of Hungary’s currency.
Posted in Europe | High Finance | News Blog | 2 comments
European Carmakers Can Get Government Loans
By Justin BerkowitzOctober 21, 2008 -
The Financial Times (FT) reports that car manufacturers’ finance arms are eligible for huge French and German bank loans approved in the past two weeks. While this isn’t a bailout per se, it does give the manufacturers’ credit operations access to some €40b worth of cash to make loans to shoppers. The FT claims that as much as 15 percent of European car manufacturer profits come from the financing divisions. Car sales in the UK and Spain are taking an old world battering, and while the loans are unlikely to affect lending in the U.S. (i.e. Mercedes will not be using the money to make loans to American buyers); this will be a major component affecting European sales and manufacturer profitability. The most frustrating part? You just know they’re going to make the money available overnight, while we’re still sitting and waiting to see what, if anything, companies like GMAC can actually get from the $700B bailout passed weeks ago. Question: is that a good thing or a bad thing?
Posted in Bailout Watch | Europe | High Finance | News Blog | 2 comments
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