Argentina tries gov’t car loan plan

Argentina tries gov’t car loan plan

Consumers to get low interest car loans as carmakers agree to produce low-cost models.

Argentina’s auto industry will get a 3.1 billion peso ($900 million) boost with cut-rate loans for first-time new car buyers, the government said Saturday.

Production Minister Deborah Giorgi’s announcement detailed a key part of a broader economic stimulus package based largely on assets of the recently nationalized pension system.

Giorgi told a news conference that six automakers will each offer two models selling for $10,000 or less for people buying a new car for the first time.

The companies, most of which saw sales drop sharply in November, will have to promise to shun layoffs and hold down profit margins on cars sold under the program.

Buyers can choose a pre-savings plan under which delivery times are determined by lottery or they can contract low-interest financing. Payments are supposed to range around $230 a month.

Argentina’s auto industry employs about 150,000 people and exports about $8 billion a year, but the country’s automakers association reported that local auto production dropped 28 percent in November from the same month in 2007, with exports down about 25 percent. more

Toyota Will Cut 3,000 Jobs in Japan as Car Sales Fall

Toyota Will Cut 3,000 Jobs in Japan as Car Sales Fall

By Makiko Kitamura

Nov. 21 (Bloomberg) — Toyota Motor Corp., Japan’s biggest carmaker, will cut its domestic temporary workforce by 50 percent as vehicle demand slumps globally.

Toyota will cut the number of temporary workers to 3,000 from 6,000 by the end of March, spokesman Paul Nolasco said today in a phone interview.

The automaker follows Mazda Motor Corp. and Isuzu Motors Ltd., which yesterday said they would slash a combined 2,700 temporary jobs in Japan in response to slowing sales. Earlier this month, Toyota forecast a 68 percent drop in full-year net income, the biggest decline in at least 18 years, as a global recession cripples auto demand.

“Falling export demand is having a big impact on production in Japan,” said Hirofumi Yokoi, a Tokyo-based analyst at automotive consulting company CSM Worldwide. “It’s unlikely plants will get shut down, but if things get worse, lines, shifts will have to be stopped and plans for new factories will be delayed.”

Japanese companies, which focused on hiring easy-to-fire contract workers during the 15 years of lackluster economic growth that followed the bursting of the bubble economy in 1990, are now shedding them as the global recession cuts demand. Temporary and part-time workers make up 33 percent of Japan’s workforce, up from 20 percent in 1991, according to the Labor Ministry.

Honda, Nissan

Honda Motor Co., Japan’s second-largest carmaker, also said today it is cutting 270 temporary workers at its Saitama plant, where the carmaker is reducing output of Accord sedans by 40,000 units. Honda is also cutting production in the U.K. of Civic compacts and CR-V sport-utility vehicles by 21,000 units.

Nissan Motor Co. said last week it will reduce its domestic production by an additional 72,000 units. Japan’s third-largest automaker had its credit rating cut one notch today by Fitch Ratings, which cited the company’s dependence on the weak U.S. auto market and an appreciation of the yen.

Toyota gained 4.6 percent to 3,080 yen at the close of trading today in Tokyo. The shares have dropped 49 percent this year, set for the worst annual performance since at least 1975.

Credit Crunch

The credit crunch has crippled U.S. vehicle sales, forcing General Motors Corp., Ford Motor Co. and Chrysler LLC to seek a combined $25 billion in U.S. government loans as they burn through cash. U.S. unemployment claims for the week ended Nov. 15 surged to the highest since 1992 as Americans filed 542,000 initial jobless claims. more

Asian Markets Recover, European Shares Up Slightly

Asian Markets Recover, European Shares Up Slightly

By KEITH BRADSHER and BETTINA WASSENER
Published: November 20, 2008

HONG KONG

Dow plunges below 8,000 – 1st time since ‘03

Dow plunges below 8,000 – 1st time since ‘03

Major indexes close sharply lower. Fears grow about economy and auto industry.
By Ben Rooney, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) — Stocks fell hard on Wednesday, with the Dow closing below 8,000 for the first time since March 2003, as ongoing anxiety about the economy and uncertainty about the future of the auto industry weighed on the market.

The Dow Jones industrial average (INDU) shed more than 400 points to close 5% lower. All 30 Dow components lost ground.

The Standard & Poor’s 500 (SPX) index slid 6% to its lowest level since March 2003. And the Nasdaq composite (COMP) lost 6.5% to settle at its lowest point since April 2003.

Stocks languished for most of the day, with the selloff accelerating near the close of trade. Wednesday’s dramatic retreat erases gains made in the previous session.

“The market is fearful of the fallout from the credit crisis and the global economic slowdown,” said Todd Salamone, market strategist at Schaeffer’s Investment Research.

Those fears were writ large in the plight of the nation’s automakers. Investors are grappling with a possible bankruptcy in the automotive industry, something analysts say could have dire implications for the broader economy, as a second day of congressional hearings on the matter ended without resolution.

Shares of General Motors (GM, Fortune 500), the worst off of Detroit’s Big Three, fell 10% while Ford’s (F, Fortune 500) stock tumbled 25%.

“The crisis of confidence is back on the front page,” said said Todd Morgan, senior managing director of Bel Air Investment Advisors, a Los Angeles-based firm with nearly $6 billion in assets under management. “You need some positive catalyst, something, to change the attitude of investors [and] the auto debate is hurting confidence.”

Markets were also impacted ahead of Friday’s monthly options expiration, which can cause increased volatility in the underlying equities.

At the same time, weak readings on the nation’s housing market and a sharp decline in consumer prices reflected the challenges facing the economy and drove down shares of financial services firms.

Shares of banking giant Citigroup (C, Fortune 500) were down 23% after hitting a session low below $7 a share. Bank of America (BAC, Fortune 500) fell 14% and JPMorgan (JPM, Fortune 500) was down about 12%.

Banks often bear the brunt of downbeat economic data as investors fear they will be forced to take more losses on the illiquid assets besmirching their balance sheets.

Also on Wednesday, the Federal Reserve released minutes from its most recent meeting that showed the central bank has significantly lowered its outlook for economic activity this year and next. It also signaled that more interest rate cuts may be needed to prevent further damage to the battered economy.

Wall Street managed to hold gains Tuesday, ending in positive territory for only the second time in 10 trading days, as investors navigated a volatile market.

Big Three: Top executives from General Motors, Ford and Chrysler returned Wednesday to Capitol Hill for a second day of hearings before the Senate Banking Committee.

The executives say they urgently need “bridge loans” from the government to keep their companies afloat. Automakers have reported huge quarterly losses as they burn through cash amid dwindling sales and tight credit.

An auto industry bankruptcy would be a “huge negative for the economy,” said Abigail Doolittle, a portfolio manager at Johnson Illington Advisors in New York. It would add to already rising unemployment, making it harder for the economy to recover, she said.

Congressional Democrats have supported using some of the $700 billion bailout fund to rescue the automakers. But Republicans have expressed doubts that such an approach will work.

Critics of government intervention in the auto industry say it would only postpone the inevitable demise of companies that have failed to remain competitive.

Grim readings: Economic data cast a pall over the market, highlighting anemic consumer spending trends and ongoing weakness in the housing market.

The Labor Department’s Consumer Price Index, a key inflation reading, fell 1% in October, outpacing the 0.8% decline a consensus of economists surveyed by Briefing.com had forecast.more