Automobile News

The World Rally Championship for one is really shattered by the current economic crisis, with the latest setback coming in the form of Subaru who announced that it is no longer a part of the competition. The company cited the on going economic recession as a pretext that forced them to reconsider their Championship future.

This recent development is quite significant as it comes barely a few days after Suzuki withdrew its name from the Championship. Moreover, with the withdrawal of Subaru, the World Rally Championship is now left in the lurch losing two third of its teams in a mere span of 24 hours. The unwanted withdrawal means that Citroen and Ford are the only manufacturers in the FIA WRC competition for next season. This is very problematic for the rally organisation, and if it continues we might not see any more Sega Rally Revo video games, never mind new races. It is important to note that Honda, Japan’s second biggest car manufacturer, made a similar decision to withdraw from the Formula One Championships citing almost similar reasons.

Fuji Heavy Industries (FHI), Subaru’s parent company, President Kyoji Takenaka while making this significant announcement at a news conference commented that the current economic slowdown that spread from the US has left the company with no other alternative but to reassess its primary objectives. He also emphasized that automobile industry, in particular, is hit hard by the recession irrespective of their nationality.

The dynamics and policies of the company need a rethink so that it stands a better chance at surviving the gloomy scenario, he added.

Meanwhile, a statement from the company reiterated that there is no other alternative left to the company rather than to withdraw so as to optimise its management resources and to strengthen further the Subaru brand.

The overwhelming menace of a dreaded global recession has taken many a public and private organisation completely by surprise. Its impact may vary from organisation to organisation, but one thing is sure, it has made companies reassess their policies and marketing agencies. The automobile industry is also hit hard, with drastic decline in the UK standing testimony to it.

The most recent company to feel the heat is Ford, one of the foremost car manufacturers in the world. The latest news emanating from the US is that the company is on the verge of collapse, unless of course it is bailed out by the government as part of a $25 billion bail out package. There might not be any sequels to Ford Racing 3 if the collapse were to happen, but far worse, hundreds of thousands of jobs would be lost and tremors sent through the world economy. Alan Mulally, the Chief Executive of the company, however, sounded optimistic amidst the surrounding gloom and offered to work for an annual salary of just one dollar in case the company manages to gets the government grant. It is not a small statement considering that Mr. Mulley is on a hefty pay roll of 2 million dollars a year.

Mr. Mullaly has also decided to sell Ford’s fleet of corporate jets, cancel next year’s bonuses for global management and US employees as well as closing more plants, et al so as to fuel congressional support. According to reliable sources the company is keeping its fingers crossed and expecting a bridging finance of around $9 billion. The company in the meantime has also claimed that if the government gave its approval it wouldn’t have to withdraw the money.

Mr. Mullaly explained that government loans would serve as a critical backstop or safeguard against worsening conditions for the company, as it (company) strives for transformational change within the company.

Keeping tab of changing economic times and various other issues confronting the automobile industry, Japanese car giant Toyota has come up with a band new model, namely the Avensis. Speaking on the sidelines of its release at a glittering ceremony, Toyota UK corporate affairs director Clive Bridge said that the current economic situation is the most opportune time to come up with a new model, and also stressed that the model in question is one of the company’s better products and should go down well with the discerning public.

It is important to note here that the this new model has come barely two months after the company has abruptly suspended the production of the night shift making the Auris, albeit temporarily. The production of the model is scheduled to take off again from March, 2009. Meanwhile, the workers working at the unit have been redeployed on community projects.

Toyota seeks to employ more than 4000 people for the production of this third generation Avensis, to be built at Burnaston, Derbyshire.

The company has a lot at stake with the launch of the new model as it by its own admission for the last few months has been going through tough times. Its quarterly profits were far from satisfactory forcing it to redraw its earning forecast for the current fiscal year. Most notably, it took a pounding in the three months leading to September as its net profits shrunk by a dreaded 69%, which was a clear case of economic slowdown in the US influencing customer spending.

Mr. Bridge however, exuded confidence that the model would do well and appeared to be pretty upbeat considering the warm reception it garnered at the recently concluded Paris Motor Show. The years of toil and sacrifices made by the workers to develop the advanced model fully stocked with extras, like high-powered car speakers, will bear fruit, he hoped.

In what should set the alarm bells ringing for the automobile industry, car sales have taken a nose dive in the UK, with October 2008 figures standing at 128,352, a sharp decline of 23 percent on October 2007. The scenario is even more pathetic for the private sales which by contrast have seen an uncharacteristic decline of 28.8 per cent.

The situation is so critical that the October decline has been rated as the worst year-on-year monthly drop since June 1991. The unhealthy trend first started in August and September this year, and gained momentum in October. Many automobile peripherals, such as sat navs, entertainments systems, multimedia monitors, and more, have witnessed equally staggering declines in sales figures. Many have credited the slump to the credit crunch that is gripping the nation.

Society of Motor Manufacturers and Traders (SMMT) executive Paul Everitt has acknowledged the difficulties surrounding the automobile industry and stressed that firm steps are the need of the hour to restore customer confidence and entice buyers back to the showrooms.

He even hinted that cuts in interest rates with the benefits being swiftly passed on to consumers are a probable solution. Scrapping planned increases in vehicle excise duty (car tax) and maintaining public expenditure on new vehicles are also believed to be essential part of the package required to bail out the industry from the turmoil. Paul in addition, also emphasized that the time is here for the European Union to take a cohesive step towards ensuring support for a continued investment in new, lower carbon vehicle technologies.