WORLD> America
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WORLD> America
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Recession rears ugly head, global auto sales shrink
(Agencies)
Updated: 2008-11-04 10:28 NEW YORK -- Corporate results and outlooks darkened on Monday, and automotive companies from Japan to Italy to Detroit said October sales were the weakest in about 20 years as economies weakened and consumer credit dried up.
While government officials have gone out of their way to avoid the use of the much-dreaded "R" word (recession) in describing the current economic straits, a number of prominent officials acknowledged the severity of the crisis on Monday. US vehicle sales plunged in October, with General Motors Co down 45 percent, making it the weakest month for the battered auto industry since the end of World War II. Mark LaNeve, GM's North American sales chief, said the collapse in the US market was linked to the "unprecedented credit crunch that is dramatically impacting the entire US economy." New car sales also fell across Europe, down 40 percent in Spain and 19 percent in Italy. The European Commission said the 15-nation euro zone was in a technical recession and economic growth would come to a virtual standstill next year. More banks warned of more big writedowns and sharp profit falls, prompting lenders to tap government funds or seek state rescues. And in the United States, factory activity contracted sharply in October, falling to its lowest point in 26 years, according one widely watched index. "Pretty grim. It means we're in a recession. It's as simple as that ...a pretty solid manufacturing recession," said Robert Macintosh, chief economist at Eaton Vance Corp. "The question is how long or deep is it going to be?" More evidence of troubles in the US came from consumer electronics retailer Circuit City Inc, which said it is closing 155 stores and cutting jobs as liquidity problems deepened and vendors tightened credit terms. Company By Company Company results around the globe looked gloomy, in particular the finance sector. French bank Societe Generale reported an 83.7 percent drop in third-quarter net profit. Net profit fell to 183 million euros ($234 million) with losses from the collapse of US bank Lehman Brothers and other writedowns costing it 1.208 billion euros in pretax income. Germany's No. 2 bank, Commerzbank, said it would take an 8.2 billion euro capital injection from the state and another 15 billion to secure refinancing. It posted a third quarter net loss of 285 million euros. Britain's top home lender, HBOS Plc, raised its hit from the value of risky assets and bad loans to more than 5 billion pounds ($8.14 billion) as takeover partner Lloyds TSB predicted a sharp profit fall. Lloyds stepped in to buy HBOS in a government-brokered deal after HBOS was hit by the crisis and concerns about its exposure to Britain's weakening housing market. In the United States, Midwest Banc Holdings Inc posted a $159.7 million third-quarter loss, and said it obtained preliminary approval to sell preferred stock to the US Treasury in return for $85.5 million of capital. The credit crunch, which stemmed from a collapse in the US housing market, has prompted banks to severely reduce lending to each other, businesses and households for more than a year now. Interbank lending rates fell, extending last week's decline, reflecting ongoing central bank efforts to add liquidity, rather than banks lending to each other. |
