Automotive News Europe - April 2020 - 6

AUTOMOTIVE NEWS EUROPE

COVER STORY

Recovery
road map
New Nissan vehicles sit parked
at the company's factory in
Sunderland, England, as car
manufacturing across Europe
stalled because of the
coronavirus outbreak.

PETER SIGAL

psigal@autonews.com

n the spring of 2008, Renault executives
in France started receiving alerts from
colleagues at Nissan North America about
the health of the U.S. auto market. Auction
prices for used cars were falling significantly. Orders were slowing, too. At the same
time, cracks were starting to show in the
U.S. subprime mortgage market, as securities lost value and adjustable-rate loans
began to reset at higher interest.
Renault's leaders decided to take action. In mid-July, Carlos Ghosn, the CEO
at the time, announced that 5,000 European positions would be cut, a total
later raised to 6,000, mostly through
attrition and severance. Inventory levels
would be trimmed, and cash flow and
production would be closely monitored.
Subcontracting costs were lowered by
98 percent. Development of a sports car
related to the Nissan 350Z was halted
and several launches were postponed.
"The crisis started sooner for carmakers
in the U.S.," said Patrick Pelata, who was
named Renault's chief operating officer
in mid-October 2008. "We looked to the
U.S., and we said it was going to come to

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Europe." That happened after giant U.S.
investment bank Lehman Brothers filed for
bankruptcy on Sept. 15, 2008, setting off
a global financial crisis that later became
known as the Great Recession.
The European auto market had begun to
soften in 2008, and other companies took
steps to counter the decline. Fiat Group
- that at the time included cars, heavy

trucks, farm and construction equipment
- in July decided to extend summer vacation closings at manufacturing plants after
noticing a global collapse in new orders in
all its operating sectors, Ferrari supercars
included. "The second half of this year and
the first half of the next could be a true
bloodbath," Fiat and Ferrari Chairman Luca
Cordero di Montezemolo told Automotive
News Europe in July 2008. "By summer of
2009, we should have a clearer idea of the
winners and the losers," he added.
Through government aid and incentives,
the European auto industry was able to
bounce back. It survived the "double
dip" sovereign credit crisis in 2011-12
to post record sales and profits -- only to
run up against an equally fearsome foe:
The COVID-19 outbreak, which has temporarily shuttered factories and showrooms around the world in a cascade of
bad news for automakers and suppliers.

I am pretty certain we
won't see a cash crunch.
Porsche CFO
Lutz Meschke

Executives, analysts and consultants who
witnessed the 2008 crisis say automakers and governments have learned lessons
that will help them navigate the unknown
impact of the coronavirus pandemic.
But back then, many companies were
flying blind. "It was moving pretty fast,"

APRIL 2020

Photo: Bloomberg

Auto industry uses lessons from 2008
recession to survive corona chaos

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Automotive News Europe - April 2020

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