“Tossing a $17.4bn government lifeline to General Motors and Chrysler on Friday, President Bush ensured the automakers wouldn’t fail in coming weeks,” said the Los Angeles Times, “sparing his own legacy another potentially devastating blow – but leaving most of the tough decisions about the US auto industry’s future to President-elect Obama.” Hot on the heels of the US aid package, Canadian prime minister Stephen Harper, fearful of a “catastrophic” industry collapse, ponied up a C$4bn (£2.2bn) emergency loan for the local subsidiaries of General Motors and Chrysler – something that “had to happen”, said the Toronto Star.
Now pressure is increasing on the British government to rescue Jaguar Land Rover (JLR), “which is understood to have requested a package of financial assistance worth about £500m”, said The Guardian’s Mark Kleinman. Indian group Tata Motors, JLR’s owners since April, have already announced a cash injection of “tens of millions”, said the FT. But in the wake of a weekend warning from JLR’s CEO David Smith that “hundreds and probably thousands” more jobs will be cut, taxpayer support for UK motor manufacturing looks to be on the cards for the second time within a third of a century, despite business secretary Lord Mandelson’s insistence that the British government doesn’t have “an open chequebook” for firms in trouble.
Across the Channel, French president Nicolas Sarkozy warned that the European Union could turn into “an industrial wasteland” without government help. European car makers were just as deserving of assistance as their US rivals, he said, while France should consider a loan programme to help consumers buy environment-friendly new vehicles. Collectively Europe’s car manufacturers have asked for about e40bn (£38bn) in support, although there’s a snag, said Huw Jones of Reuters. “Critics of intervention argue such help may undermine strict EU rules on competition and state aid.”
Even the mighty Toyota, the world’s second-largest automaker, is forecasting its first operating loss in 71 years. Scrapping a previous ¥600bn (£4.5bn) forecast for a now-expected ¥150bn current year loss, president Katsuaki Watanabe said the company was “facing an unprecedented emergency situation. Unfortunately, we can’t see the bottom.” The soaring yen is making Japanese exports ever more expensive: every one-yen gain against the dollar and euro trims Toyota’s annual operating profit by ¥40bn and ¥6bn. “Toyota’s cost-cutting can’t match plummeting sales,” said Koichi Ogawa at Daiwa SB Investments. “Everyone’s getting hurt.” Rating agency Moody’s is reviewing Toyota’s AAA rating on $19bn of debt and a cut would raise the company’s borrowing costs. So far, however, there’s been no call for a taxpayer-funded bail-out in Japan.