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TOKYO (Reuters) - Honda Motor Co warned of lower-than-expected annual profits as a deepening financial crisis has hammered demand for cars and sent the yen soaring, while U.S. rivals sought government aid to fund a proposed merger to survive a shrinking market.

Carlos Ghosn, chief executive at rival Nissan Motor Co , warned the industry was treading in "uncharted territory" that required a drastic shift in priorities to make it through the next few years.

"This is not going to be a short-term crisis. I don't think we'll get out next year, or even in 2010," Ghosn, also head of France's Renault SA , told a business seminar in Tokyo.

Honda is considered one of the best-placed among global automakers to weather collapsing car demand and shrinking margins thanks to its manufacturing flexibility and vehicle line-up that is geared toward fuel-efficient models.

But even Japan's No.2 automaker is struggling against a steeper-than-expected contraction in U.S. and European car sales and a spillover effect into China, India and other emerging markets that is seen continuing at least through next year.

"Market conditions have turned much worse than we had anticipated," Honda Executive Vice President Koichi Kondo told a news conference in Tokyo.

"What's different now is that it's not just light trucks that aren't recovering (after a recent drop in gasoline prices). Passenger cars have started to fall, too, and that suggests the credit crisis is sapping the desire to consume."

Honda cut its annual operating profit forecast by 13 percent, setting the stage for sharper revisions at rivals including Toyota Motor Corp and Nissan when they report interim results in the coming weeks.

Other Japanese manufacturers are also suffering, with Sony Corp last week more than halving its annual operating profit forecast due to slowing demand and a surging yen.

SUDDEN SPIKE

Most analysts had expected Honda to keep its forecasts largely unchanged until just a week ago, when the yen suddenly jumped to multi-year highs against almost all major currencies, eroding the value of earnings made overseas.

Honda lowered its global car sales forecast for this year by 65,000 units to 4.015 million units, mainly blaming a sharp fall in European demand. It now expects the yen at 100 to the dollar and 135 to the euro in the second half -- far from the less favorable levels of 95 yen and 120 yen now.

"If there are risks for Honda to cut its forecast again, they are the euro and Asian auto sales," said Takeshi Osawa, senior fund manager at Norinchukin Zenkyoren Asset Management.

Across the Pacific, Detroit's loss-making General Motors Corp , Chrysler LLC and Ford Motor Co face an increasingly uncertain future as they burn through cash, while many European peers brace for razor-thin margins.

Sources told Reuters on Monday that GM and Cerberus Capital Management , which owns 80 percent of Chrysler, had asked the U.S. government for about $10 billion in an unprecedented rescue package to support a proposed merger.

That request is in addition to whatever funds would be allocated under an already approved $25 billion government-backed program to provide low-interest loans to the U.S. auto industry for retooling to make more fuel-efficient cars.

"I personally do not believe deals involving cash will happen unless the cash comes from outside," Nissan's Ghosn said, adding that managing cash flow was top priority now for many automakers.

Volatile markets, a sharp slowdown in global demand and tougher competition would likely prompt consolidation across a number of industries, Ghosn said.

http://ca.news.yahoo.com/s/reuters/081028/business/cbusiness_us_autos
 

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Looks like everyone suffering. Maybe GM can made it to 2010 without the merger or government assistance.
Doesn't seem likely since Wagnoner is currently scrambling for $25B from Uncle Sam to acquire Chysler. It will be interesting to see the fall-out. Hopefully it's in everyone's best interest and doesn't spell out the ultimate doom and gloom end to GM!
 

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Doesn't seem likely since Wagnoner is currently scrambling for $25B from Uncle Sam to acquire Chysler. It will be interesting to see the fall-out. Hopefully it's in everyone's best interest and doesn't spell out the ultimate doom and gloom end to GM!
Gm is not going too acpuire chysler, if they were going to merger with chrysler they would have done it with or with-out the auto-aid. This is just for auto-aid form these goverment.
 

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Wow, someone try and tell me that The US is not the economic powehouse of the world, when we go down the rest of the world follows, and I can guarantee that they wont recover untill we do.
 

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The difference is Honda and Japanese automakers still make money, only less than they forecast now.

GM and other US automakers make no profit and are going down in flames begging for taxpayer money as a lifeline.
 

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Quality is going up and warranty coverage is better than most foreign makes, yet Americans continue to favor foreign autos over ours.

Most don't give a crap if our auto industry goes down the tubes. Time for our people to step up to the plate and show some patriotism by buying American brands. They have no clue as to the impact the failure of two or more of our auto companies would have on this already struggling economy.

Ford ,GM and Chrysler wouldn't need a federal bail out if our own people showed some pride in their country and shifted back to buying our American brands. If not , the govt should use the tax money from those who buy the foreign stuff to keep our auto industry afloat.

It's in our National security interest to do so weather they think so or not, so the govt has every justification to do it .( Least they could do is promise to back up any loan a private finantial institution would make to help GM/Chrysler or Ford if they need help.
 

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Quality is going up and warranty coverage is better than most foreign makes, yet Americans continue to favor foreign autos over ours.

Most don't give a crap if our auto industry goes down the tubes. Time for our people to step up to the plate and show some patriotism by buying American brands. They have no clue as to the impact the failure of two or more of our auto companies would have on this already struggling economy.
You can't have it both ways.
- American quality going up? Sure.
- GM and Chrysler offer better warranties than most foreign competition? Sure.
- Americans continue to favor foreign autos over ours? Not so much....especially in the case of GM vs. Toyota. Remember Toyota posted a much larger loss of market share than GM by %.

Ford ,GM and Chrysler wouldn't need a federal bail out if our own people showed some pride in their country and shifted back to buying our American brands. If not , the govt should use the tax money from those who buy the foreign stuff to keep our auto industry afloat.

It's in our National security interest to do so weather they think so or not, so the govt has every justification to do it .( Least they could do is promise to back up any loan a private finantial institution would make to help GM/Chrysler or Ford if they need help.
Pride in one's own country is not synonymous with pride in auto brand X in my humble opinion.
 

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Thats funny, today Huey's Honda had a radio ad talking about how Honda was not having the problems the other companies were, and how they were not having problems getting financing for people.
The two statements are relatively correct (1. Honda is having less problems than most, if not all, other major automakers, and 2. I don't see why they would not keep financing people, especially if they say so).

There's nothing funny here: what you heard on the radio is absolutely not incompatible with the fact that Honda is going to be making less billions this year than usual (which is what the article is about).




article said:
Honda is considered one of the best-placed among global automakers to weather collapsing car demand and shrinking margins thanks to its manufacturing flexibility and vehicle line-up that is geared toward fuel-efficient models.
 

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Time for our people to step up to the plate and show some patriotism by buying American brands.
That isn't patriotism. Making the second largest financial purchase of your life based on emotion is a foolish thing to do. I'm going to spend my cash on vehicles that have proven themselves over the longhaul, not on a JD initial quality survey.
 

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Quality is going up and warranty coverage is better than most foreign makes, yet Americans continue to favor foreign autos over ours.

Most don't give a crap if our auto industry goes down the tubes. Time for our people to step up to the plate and show some patriotism by buying American brands. They have no clue as to the impact the failure of two or more of our auto companies would have on this already struggling economy.

Ford ,GM and Chrysler wouldn't need a federal bail out if our own people showed some pride in their country and shifted back to buying our American brands. If not , the govt should use the tax money from those who buy the foreign stuff to keep our auto industry afloat.

It's in our National security interest to do so weather they think so or not, so the govt has every justification to do it .( Least they could do is promise to back up any loan a private finantial institution would make to help GM/Chrysler or Ford if they need help.
A lot of the decline in the domestic auto market is courtesy of problems many auto buyers faced in the 1980s and early 1990s. Today, perception remain and it takes about 10 years for perceptions to change. GM didn't really start changing in terms of quality until the late 90s, so we're only starting to see folks give GM an even break. Hence, cars like the Malibu actually interest people but vehicles like the Enclave and CTS entice them back.

This has nothing to do with patriotism, but financial self interest. If you got burned with a domestic and it ate your cash you're unlikely to buy another one unless there's a compelling reason. Lutz truly comprehends this and its why we saw the CTS as it is now and why the Enclave is the way it is. But GM needs more. The Cruze will do wonders for small cars at GM, it's that different inside and out. But GM needs every single vehicle to be way above the competition just to entice folks back to say nothing of getting that "even shake" from the media. Yes, it might be "unfair" that GM has to do so much better, but when you're someone like GM people expect the historical GM back from the 50s and 60s, so consumers and the media are actually demanding that GM be THAT GM and not just a clone of Toyota or Honda. As they build things like they did in the 50s and 60s GM is getting some consumers back. I have friends who swore off GM but the CTS and Enclave and Acadia enticed them back. And the Cruze has more than one of my Toyota loving friends drooling, so all is not lost.

As to national security, the real concern is fuel -- or more specifically, oil. The US has to eliminate as much imported oil as possible. If they can get their oil consumption down so they're only buying from Canada and Mexico the US would be on massively better economic footing. Think of the lack of capital outflow to unfriendly or semi-friendly regimes that can instead be pumped into the US economy, into research and development, into alternative fuel sources, etc. It's billions upon billions going out that would do better to stay home. Plus, from the national security perspective it's always best to feed your friends and not those who are hostile to you. If the US can get to the point it only depends on North American oil, leaving the Middle East to China, Japan, and Europe, the better the US will be.

Thus, I'm a huge proponent of alternative fuel strategies, of electric cars with range extenders (like the Volt), even of hybrids so long as they reduce US oil demand. And, no, I'm not a believer in Global Warming. I make computer models for part of my living and the climate models I've seen are crap, so I doubt they're remotely accurate. However, I still believe reducing oil demand is crucial for US national security and thus, in my opinion, the US gov't should pump billions into GM, Ford, Chrysler and Tesla to create the automobiles and drivetrains we need that rely less on oil and more on electricity. Good for the US, good for national security, and good for the environment.

In summary, I don't believe in blind loyalty to any manufacturer, but I do believe we need to help our domestic industries -- esp. if they can help us eliminate a cost, retaining capital at home without impacting global trade (i.e., no tariffs). Loyalty is earned, patriotism, on the other hand, stems from love for your nation and each of our nations is more than any given manufacturer.
 

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Wow, someone try and tell me that The US is not the economic powehouse of the world, when we go down the rest of the world follows, and I can guarantee that they wont recover untill we do.
Don't know if we're the economic power house, we are however the source of billions and billions that transfer to their nations month after month. Our monthly trade deficits across all industries have been averaging $60B a month. Thus when our spigot runs dry, their financial pipeline gets short, their going to hurt.
 

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Thats funny, today Huey's Honda had a radio ad talking about how Honda was not having the problems the other companies were, and how they were not having problems getting financing for people.

What do you expect them to say? "hey, it's awful slow here as well, would someone please come and buy a car, please, please, pretty please"
make no bones about it, ALL DEALERS ARE HURTING. some more than others. this next year will separate the wheat from the chaff.
 

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A lot of the decline in the domestic auto market is courtesy of problems many auto buyers faced in the 1980s and early 1990s. Today, perception remain and it takes about 10 years for perceptions to change. GM didn't really start changing in terms of quality until the late 90s, so we're only starting to see folks give GM an even break. Hence, cars like the Malibu actually interest people but vehicles like the Enclave and CTS entice them back.
Yes, I think the perception of quality is mostly based on what was built 5 or 10 years ago, not what was built yesterday. When someone's 2001 Grand Prix blows up, their perception will be "GM makes junk", not "GM used to make junk, but according to this study, the quality of their current cars is competitive".

Also GM and Domestics have no credibility on the quality issue. They've made so many claims in the past that turned out not to be true and nobody believes them anymore.

(Not that all GM cars from 10 years ago were junk, but they did make some stinkers.)
 

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Yes, I think the perception of quality is mostly based on what was built 5 or 10 years ago, not what was built yesterday. When someone's 2001 Grand Prix blows up, their perception will be "GM makes junk", not "GM used to make junk, but according to this study, the quality of their current cars is competitive".

Also GM and Domestics have no credibility on the quality issue. They've made so many claims in the past that turned out not to be true and nobody believes them anymore.

(Not that all GM cars from 10 years ago were junk, but they did make some stinkers.)
The truth of the matter is that for every good quality GM story and the big 3 for that matter, there is 5 or 6 stories about their failure, and there so many people that can be swayed to take a side they know nothing about. The other day I was at an event and someone started talking about the Challenger & G8. Then out of nowhere someone else pops up and says American cars are junk and starts saying that Benzes have the best quality. Then they got into a whole argument that the American car is a POS and Benzes and German cars in general have good quality. The ironic part of all this is that VW is known for some really bad cars but this person kept insisting that all American cars are made to break down.

Lets just say this... If my 2000 Honda Civic's tranny fails then its my fault but if my 2000 Ford Focus' tranny fails then its Ford's fault. If Toyota builds a truck that has a tailgate problem its not Toyota's fault but if Chevy builds a truck that has a tailgate problem its because GM doesnt know how to build s***.
GM did make bad cars. I know that we all know that. Ford and Chrysler are no exception either. But Toyota, Honda, Nissan, Mitsubishi, Mazda, Subaru, Isuzu, BMW, Benz, VW, Renault, Peugeot, Fiat, and countless others have made bad cars too. Every single brand has had at least 1 car that was a POS. There was a time when Subaru was the laughingstock of the American auto industry. Nissan almost went bankrupt. Toyota is having problems right now. But even though everyone goes through their drama their reputations are diffrerent. Ford cars blow up, GM cars have engine and tranny problems, Chrysler cant build a tranny for s***, Toyota knows how to build a solid car, Honda builds extremely reliable engines, Nissan builds excellent quality cars. Yet my Cavalier has almost 200,000 miles and no engine problems, no tranny problems. The Grand Cherokee did have a tranny failure but thats because the person who changed the tranny fluid did it wrong. The Crown Vics did blow up if you rear ended them hard but they fixed it. Explorer tires blow up but thats both Fords fault as well as Firestone. But everyone seems to focus on the bad cars. Oh the Cavalier was a spartan car, that car had engine problems this that yada yada yada, oh the Escort has bad engines, bad trannys, etc. Oh the Corolla has the best quality, i have 160,000 miles on mine without one oil change and it still works. Hyundai and Kia is a whole nother story but the end is the same. Some people have had good Hyundais so they praise the car and some have had bad ones so they say its a bad car. In the end all cars have to pass a set of tests to be sold in the US and Canada, Europe, Asia, Australia and South America so they all have to withstand those tests. Because of that all quality is more or less the same, but since its humans who put them together there will be cars that are lemons or that have bad quality, all cars will have bad parts since the distributor that they get the parts from are humans. Now if the brand doesnt make an effort to fix the issues, then it is a bad brand. But most if not all always focus on quality.
 
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