Wednesday, November 4, 2009

Signs of recovery? Or not?


There are two interesting, but possibly contrasting, stories are in the news today from the motor industry in terms of the economic situation and how it is affecting two companies.

Firstly, the good news comes from GM who have decided not to sell their European business due to "an improving business environment for GM over the past few months". Having been one of the bigger casualties of the economic downturn it seems that GM now see the prospects improving and can manage their business without having to raise the money the sale of Opel and Vauxhall would have brought - this has to be good news for many sectors, not just the automotive industry. There are many news stories about this, one being from The Times or BBC News

The second news, which may not be as good, is that Toyota have announced they are pulling out of Formula 1 with immediate effect, citing as the reason as "the current severe economic realities" which indicates that Toyota do not have as positive an outlook as GM, in itself quite a turnaround from recent trading for both organisation. Whilst there are undoubtedly additional reasons behind the Toyota announcement, it does reflect that there are still concerns regarding the economic climate for the foreseeable future. More on the Toyota story at Autosport

Of course, there was a third story this week, which was the announcement by Ford of profits of nearly $1bn profit in the 3rd quarter - indicating that their cost cutting efforts are working and that the worst of times may be past for Ford, and linked with the GM announcement does it mean that things are better in the US than Japan? I am not sure about that as Toyota sell a large number of cars in the US, but it is an interesting situation. More on this story at BBC News

In terms of the GM story, I hope the UK Unions are right to be pleased with the decision, although unfortunately I don't really see the prospects for long term UK jobs being any better under GM ownership than they would have been under Magna ownership. But that is a subject for another area completely!