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Mon, Apr 20, 2009 - Page 10 News List

Global auto sector likely to be rebuilt after crisis: pundits

AP , FRANKFURT, GERMANY

The global auto industry will be remodeled once the economic crisis debris is cleared, but analysts are hazy over how many giants will be humming, which ones will be hauled away and where cars will be made.

Within 10 years, sales will be boosted by electric and hybrid vehicles, but a wave of high-profile auto mergers is unlikely, especially cross-border deals since cultural differences scuppered earlier attempts, analysts say.

“I think the test will be this year,” Metzler Bank auto analyst Juergen Pieper said when asked about moves within the sector.

“If we don’t see action this year, then we will get back to normal in the next two-three years,” after plunging demand has hit bottom.

IHS Global Insight said industry forecasts “predict a 20 percent slump in vehicle production in the 27 EU members between the start of 2008 and the end of 2009,” with a revenue loss of 60 billion euros (US$78 billion).

Martin Winterkorn, head of Europe’s biggest car maker Volkswagen, said last week that once the crisis had passed, he was “certain there would remain two car makers in France, at least three in Germany and at least two in Japan.”

“I’m not worried about the automobile’s future in Europe,” Winterkorn told the French Journal de l’Automobile.

Cars will also be made in China, South Korea and the US, he said. Fiat chief executive Sergio Marchionne has claimed only six major car makers would survive the global slump.

“As far as mass-producers are concerned, we’re going to end up with one American, one German of size, one French-Japanese, maybe with an extension in the US, one in Japan, one in China and one potential European player,” he told the Automotive News Europe in December.

German auto expert Ferdinand Dudenhoeffer scoffed at Marchionne’s forecast, saying it was “an old story” told years ago that should have seen General Motors (GM) become “the biggest and strongest car maker in the world.”

“The opposite is true,” he said as GM sought US$30 billion in emergency aid from the US government.

Dudenhoeffer, Pieper and Willi Dietz from the German IFA Institute for Automotive Business agreed that closer cooperation in research and development and production was the only way for European companies to achieve economies of scale.

IHS Global Insight said more than 20 billion euros were invested annually in European auto research and development.

“We will see much more cooperation between the OEMs [Original Equipment Manufacturers],” Dietz said, using the industry term for brand-name car makers.

He pointed to work between BMW and Peugeot of France, BMW and German rival Daimler, and Mitsubishi of Japan and Peugeot in electric cars. These last are essential for manufacturers and a first wave of prototypes is already being shown at auto shows.

Also See: Automaker showdown looms

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