November 4, 2009 / 8:36 AM / in 8 years

WRAPUP 6-Chrysler pitches turnaround plan, GM keeps Opel

   * Chrysler unveils 5-year turnaround plan
* GM scraps Opel sale, cites improving business conditions
* Germany says "unacceptable"; Unions scrap savings deal
* Nissan raises FY outlook after forecast-beating Q2
* Toyota quits F1 racing, Mercedes to cut 1,000 jobs  (Adds GM comments on Opel in paragraph 14)
 By Jo Winterbottom and Michael Shields
 DETROIT/FRANKFURT, Nov 4 (Reuters) - The mood in the global automotive industry has shifted to cautious optimism, marked by the unveiling on Wednesday of Chrysler's turnaround plan and General Motors' plan to keep its Opel unit.
 However, automakers were in no mood to celebrate a potential recovery and continued to slash costs, with Toyota Motor Corp (7203.T) announcing on Wednesday it was quitting Formula One motor racing and Daimler AG (DAIGn.DE) moving to cut 1,000 jobs at its Mercedes-Benz division.
 A year of turmoil has reshaped the auto industry and those relying on it.
 Optimism abounded in the Detroit suburb where Chrysler is based, however, as Fiat SpA FIA.MI Chief Executive Sergio Marchionne detailed plans intended to revive the U.S. automaker and revamp nearly every element of its operations. [ID:nN0421635]
 Kicking off a day-long presentation of Fiat's five-year strategy for Chrysler, he said analysts underestimated the financial resilience of the U.S. automaker after deep cost cutting by its former owner, Cerberus Capital Management.
 "Most of you underestimated the substantial reduction in fixed costs that was carried out by the old Chrysler," Marchionne said. "The new Chrysler is being incredibly parsimonious."
 Chrysler needs cars and trucks that consumers want, Mike Jackson, CEO of AutoNation Inc (AN.N), the largest U.S. auto dealership group, said on Wednesday at the Reuters Auto Summit in Detroit. [ID:nN042114]
 KEEPING OPEL
 However, at least one major shakeup will not go ahead.
 After months of negotiations, General Motors Co [GM.UL] abandoned the sale of Opel to a group led by Canada's Magna MGa.TO on Tuesday, saying improving business conditions and the strategic importance of Opel had prompted the decision by its board. [ID:nN03522653]
 GM Europe said the plan for Opel included a 30 percent cut in fixed costs but declined comment on possible job cuts and plant closures.
 German union and government officials reacted with anger and frustration after agreeing to jobs concessions and billions of euros in assistance to support the sale plan.
 "General Motors' behavior towards Germany is completely unacceptable," said German Economy Minister Rainer Bruederle.
  GM's behavior showed the "ugly face of turbocapitalism," said Juergen Ruettgers, the premier of North Rhine Westphalia where Opel's Bochum plant lies. Opel labor leader Klaus Franz said the unions would not give in to GM's "blackmail" to help finance its plans and scrapped a deal made on cost savings.
 German Chancellor Angela Merkel agreed with Franz on Wednesday that GM must present a plan for Opel that focuses on job security, while Russian Prime Minister Vladimir Putin said the German trust appointed to oversee Opel, and not GM's board, should decide any further steps. [ID:nBAT004947] [ID:nL4159263]
 However, GM, which hopes to receive financial backing from European governments and support from the labor unions, said up to 10,000 job cuts are possible and the automaker was reviewing its options on plant closings. [ID:nN0442527]
 In the United States, the White House distanced itself from GM's announcement, saying on Wednesday that it played no role in the decision. [ID:nN044469]
 ON THE MEND
 Automakers globally have struggled to cope with plunging demand brought on by the global financial crisis, which helped push GM and Chrysler into bankruptcy earlier this year.
 But a range of government measures to attract buyers has helped revive sales and many automakers have raised forecasts.
 Nissan Motor Co Ltd (7201.T), Japan's No. 3 behind Toyota and Honda Motor Co Ltd (7267.T), beat expectations with second-quarter results and raised its full-year forecast. [ID:nSP536647]
 Nissan, 44 percent-owned by Renault SA (RENA.PA), expects an operating profit of 120 billion yen ($1.3 billion) in the year to end-March, instead of the 100 billion yen loss it had forecast.
 "Both Nissan's outlook and last night's U.S. figures are indications that things are getting better for automakers," a Paris-based trader said.
 U.S. auto sales hit an annualized rate of 10.46 million units in October, a level not seen in a year excluding July and August when the U.S. government's "cash for clunkers" incentives program sparked a surge in sales. [ID:nN03411936]
 Graphic on U.S. auto sales and relative performance of global auto stocks: here
 Nissan earnings graphic: here
 Ford Motor Co (F.N) is also doing well. The only U.S. automaker not to file for bankruptcy this year on Monday posted a surprise third-quarter profit of nearly $1 billion, defying Wall Street forecasts of a loss. [ID:nN02411585]
 COST CUTS KEY
 Still, automakers are relying on cost cutting rather than any lasting surge in sales.
 Toyota had an estimated annual budget of around $300 million for its Formula One team, which has never won a race since entering the series in 2002. It finished fifth out of 10 teams in this year's F1 constructors' rankings. [ID:nT151120]
 Daimler plans to cut 1,000 of the about 45,000 jobs at the Mercedes-Benz Cars premium division by offering a variety of buyout packages to staff. [ID:nL4411996]
 Honda, which quit the F1 series last December, said on Wednesday it was aiming to break even in Japan using just 70 percent of its capacity to build cars. Last week, it nearly tripled its annual operating profit forecast for the year, far above expectations. [ID:nT55879] [ID:nT324227]
 Japan's Bridgestone Corp (5108.T) said on Monday it would stop supplying tires to Formula One after the 2010 season. [ID:nSP485574]
 Germany's BMW said on Tuesday it still saw positive 2009 earnings thanks to cost cuts even as it repeated sales volume was set to fall 10-15 percent. [ID:nL2426759]
 In Russia, the government could allow Renault to buy control of AvtoVAZ (AVAZ.MM) as part of a broader plan to save the ailing company, a Russian government source told Reuters. Renault already owns 25 percent of AvtoVAZ. [ID:nL4173960]
 For Reuters Autos Summit coverage, click  here  (Additional reporting by Soyoung Kim in Detroit, Yoshifumi Takemoto and Alastair Himmer in Tokyo, Noah Barkin in Berlin and Blaise Robinson in Paris; Writing by Ben Klayman, Lincoln Feast and Sitaraman Shankar; Editing by Ian Geoghegan, Andrew Callus and Matthew Lewis) 

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