Global carmakers to face bumpy road ahead
24 Jun 2002
Global
carmakers to face bumpy road ahead
Our Corporate Bureau
24 June 2002
New York: A combination of continued reliance on rebates and cheap financing, a fragmented and saturated European market and fierce competition in Asia will prolong the fierce price competition among global car majors, says a Standard and Poors (S&P) research report.
"The
global automobile business is cutthroat," says Efraim
Levy, S&P senior equity analyst for the auto and auto
parts industry and author of the survey. "The proliferation
of vehicle models has contributed to increased competition
and has hurt profit margins. We dont expect much improvement
any time soon."
S&Ps report also describes varying outlooks for the United States three largest automakers.
According to the analyst, the forecast for General Motors has improved following substantial gains in the quality of its products and improved profitability. At Ford, the number two US car manufacturer continues to work its way out of a series of long festering troubles arising from the continued effects of extensive recalls of Firestone tires, lower sales volume and low employee morale that have drained cash and resulted in sharply cut dividends, and a shake up of top management.
On the other hand DaimlerChryslers Chrysler division, after several quarters in the red, has achieved a return to profitability in the first quarter of 2002 resulting from higher factory shipments and improved costs.
A critical part of the industry supply chain, auto parts suppliers face more difficult circumstances, due in large part to the decline in vehicle production from a weakened global economy but also from ill-advised expansions and acquisitions and asbestos-related litigation costs.
Our Corporate Bureau
24 June 2002
New York: A combination of continued reliance on rebates and cheap financing, a fragmented and saturated European market and fierce competition in Asia will prolong the fierce price competition among global car majors, says a Standard and Poors (S&P) research report.
"The
global automobile business is cutthroat," says Efraim
Levy, S&P senior equity analyst for the auto and auto
parts industry and author of the survey. "The proliferation
of vehicle models has contributed to increased competition
and has hurt profit margins. We dont expect much improvement
any time soon."S&Ps report also describes varying outlooks for the United States three largest automakers.
According to the analyst, the forecast for General Motors has improved following substantial gains in the quality of its products and improved profitability. At Ford, the number two US car manufacturer continues to work its way out of a series of long festering troubles arising from the continued effects of extensive recalls of Firestone tires, lower sales volume and low employee morale that have drained cash and resulted in sharply cut dividends, and a shake up of top management.
On the other hand DaimlerChryslers Chrysler division, after several quarters in the red, has achieved a return to profitability in the first quarter of 2002 resulting from higher factory shipments and improved costs.
A critical part of the industry supply chain, auto parts suppliers face more difficult circumstances, due in large part to the decline in vehicle production from a weakened global economy but also from ill-advised expansions and acquisitions and asbestos-related litigation costs.