Automotive News Europe - January 19, 2009 - 1

Automotive News Europe e Renault makes new Megane leaner 3 14 German automakers dominate in Detroit 3 10 & 18 Breitschwerdt’s gutsy move changed Mercedes-Benz 32 www.autonewseurope.com crain January 19, 2009 · Vol. 14 · No. 2 © Crain Communications GmbH. All rights reserved News Volkswagen’s small Up variant may get 3 seats DETROIT Volkswagen could unveil a shorter variant of its Up minicar concept at the Geneva auto show. “Wait for the next motor show and you may see a small derivative of the Up,” Ulrich Hackenberg, VW board member responsible for development, said. “On such a smaller derivative model of the Up, a three-seat configuration is possible,” Hackenberg said. The model could compete with Toyota’s iO minicar. The Up (shown) was first displayed at the 2007 IAA in Frankfurt. Wim Oude Weernink Saab gets ready to run itself Sources say parent GM wants to give Swedish carmaker control of its own finances John Revill Automotive News Europe General Motors is preparing to turn its Saab subsidiary into a separate business, a move that will make the struggling brand more attractive to potential buyers. “Saab has been negotiating with GM and the Swedish government about becoming a more independent company, initially as part of GM,” a GM source said. That means the Swedish carmaker would take control of its decisionmaking and finances, sources said. GM has failed to find a buyer for Saab slide The Swedish automaker’s global sales have declined 2008 93,338 2007 125,203 2006 134,857 Source: Company Saab. Trying to sell the brand is part of GM’s strategic review of the carmaker, which started in December. Saab spokesman Eric Geers declined to comment on the review but did say Saab has had “positive and constructive discussions with GM and the Swedish government about the future structure of the business.” Stefan Lofven, president of IF Metall union in Sweden, believes separating Saab from GM could work. “You have to make sure there is a company that GM can sell,” he said. “That means a company that is a separate entity where people can look at the balance sheets and you know what you are buying.” GM executives will decide the future of Saab before February 17, which is when they submit their business plan to the US government. GM has received $9.4 billion in emergency loans from the US government to keep its business alive. Own decisions Paul Akerlund, head of Saab’s union, said: “Under this [plan], the Saab board will be more like a normal board, and less dependent on what happens on GM’s European strategy board. They will make their own decisions.” GM will still be the owner, but Saab will have its own budget, Akerlund said. Negotiations include how much money GM could give Saab to set up on its own. Saab likely will move all of its operations back to Sweden, including research and development and design work, which is now done in Rüsselsheim, Germany. The next generation Saab 9-5 medium-premium car also would stay at Saab’s plant in Trollhättan, Sweden, and not move to sister brand Opel’s factory in Rüsselsheim. Senior GM bosses are losing patience with Saab, which the company bought outright in 2000. At the Detroit auto show last week, GM Vice Chairman Bob Lutz said: “Frankly, they’ve been on GM life support.” ANE Porsche board ready to add VW union reps MUNICH Three Volkswagen union members will join Porsche Automobil Holding SE’s 12person supervisory board. Porsche Automobile would not say who the three union members will be, but it is highly likely Volkswagen’s union chief, Bernd Osterloh, will get one of the seats during the company’s annual meeting on January 30. Porsche Automobil oversees the Porsche family’s 51 percent stake in VW group as well as the sports car maker Porsche. Bettina Mayer The danger of deep discounts Automakers are fighting harder than ever to get customers to purchase their new cars. Some say the battle has gone too far. “The real question is whether the other carmakers are going to continue using these absolutely brutal methods to drive down their own inventories,” said Renault sales boss Patrick Blain. Offering deep discounts, 0 percent financing and free maintenance can entice people to purchase a new car. But incentives can backfire because they lower the value of a car in the second-hand market and cause consumers to expect discounts. Despite the potential backlash from using incentives, General Motors Europe President Carl-Peter Forster says that they are needed in the current downturn. But he, too, wonders: “Where do you stop?” 3 See Story Page 3 Quote “We will spend less on auto shows without looking cheap.” Dieter Zetsche, Daimler CEO 3 See Page 7 Photo: Alamy Incentives may help to cut bloated inventories in the short term, but their negative effect on values can do lasting damage. PSA, BMW 2009 profits at risk Analysts predict sharp declines as a result of weak unit sales money, but they suggest that Daimler and Fiat group could see more dramatic declines in profitability and might even report losses. Lawrence J. Speer Automotive News Europe PARIS Automakers’ profits are at risk this year and next due to predicted declines in global unit sales. Investment bankers Goldman Sachs predict that PSA/Peugeot-Citroen will have an operating loss of nearly ¤1 billion this year while BMW and Renault each will report operating losses of more than ¤200 million. (See table, right) Other analysts are more optimistic on BMW’s ability to keep making Fading fortunes Estimated operating profit (in €) and % operating margins at top European automakers from 2008 to 2010. 2008 2009 2010 BMW 1.53bn -293mn 1.27bn 2.8% -0.6% 2.6% Daimler 5.01bn 897mn 1.76bn 5.3% 1.1% 2.2% Fiat 3.23bn 859mn 860mn 5.4% 1.8% 1.8% PSA 957mn -947mn -663mn 1.7% -2% -1.4% Porsche 7.71bn 325mn 819mn 99.1% 5.6% 12.5% Renault 606mn -232mn 33mn 1.6% -0.7% 0.1% VW 6.15bn 2.29bn 2.82bn 5.5% 2.3% 2.8% Source: Goldman Sachs Industry in crisis For the latest news on the uncertainty facing the automotive industry, log on to autonewseurope.com Also, coming this month: January 22 Fiat group reports full-year results Register for ANE’s daily newsletter and news alerts autonews.com/anenewsletter Pressure on sales While the analysts disagree on the exact figures, most of the experts contacted by Automotive News Europe predict that the sales slump will last through 2010. Their forecasts put automakers’ revenues, operating profits and margins in the next two years well below levels seen in 2008. “Companies will have to adjust to a lower level of sales,” said Max Warburton, a London-based analyst with Sanford Bernstein. “This year is going to be pretty awful for everybody. The industry has just got to pray that things improve from a disastrous fourth quarter,” Warburton said. Automakers declined requests to comment on the financial outlook for 2009 and beyond. Executives and spokesmen at Renault and PSA said that they want to present final results for 2008 before doing any future forecasting. The European market was down 7.8 percent in 2008, with new-car sales dropping to a 15-year low of 14.71 million units, according to 3 See Page 2 Automotive News Europe, Postfach 1165, D-82230 Oberpfaffenhofen PVSt 64733 DPAG Entgelt bezahlt

http://www.autonewseurope.com http://www.autonewseurope.com http://www.autonewseurope.com http://www.autonews.com/anenewsletter

Automotive News Europe - January 19, 2009

Table of Contents for the Digital Edition of Automotive News Europe - January 19, 2009