Automakers in Europe and South Korea forecast bleak times ahead on Thursday as US players already hit hard by a fast slowing economy began a round of closures and job cuts. Results from Germany's Daimler, South Korea's Hyundai Motor and Fiat in Italy added to the gloom facing the automotive industry as recession clouds gather in the developed world. The news came as Daimler's US affiliate, Chrysler, cut a shift at a Toledo plant and brought forward the closure of its Newark (Delaware) operation, and as a report said General Motors was cutting jobs, too. GM and Chrysler are in talks about a cost-saving merger deal that could also present Daimler a key opportunity to unload its 19.9 percent Chrysler stake that cost it 1.05 billion euros in the first nine months of the year. “These are extraordinary and unprecedented times,” Daimler Chief Executive Dieter Zetsche told investors during a call, citing hits to its sales, revenue, margins and order book. The maker of Mercedes-Benz cars and the world's biggest truckmaker lowered its expectations for the year and said its own forecasts were guesswork. It implicitly guided for a break even at its luxury car business in the fourth quarter that a year earlier was generating a 10 percent margin. “The (Daimler) figures are even below our very cautious estimates. Provisions for lower residual values and lower margin targets at Mercedes Benz cars are also surprisingly weak,” said DZ Bank analyst Michael Punzet. Fiat said global demand for its products could drop 10-20 percent and its profit tumble by as much as 65 percent in a “worst-case” scenario. At Hyundai, South Korea's top car maker, a senior official expected demand in emerging markets to fall next year. Global carmakers face a sharp drop in sales as drivers put off major purchases on fears of a recession and the cost – if not the lack – of getting loans. Widespread production cuts are pushing parts suppliers to the brink and forced German diversified conglomerate Rheinmetall to also lower guidance on Thursday due to plummeting orders for pistons, valves and oil pumps. “We will see a number of collapses in some of our suppliers,” Daimler's Zetsche cautioned. The market had expected their outlooks to be bad but they did not know how bad until Thursday when the first batch of results from the sector came out. Fiat shares were briefly suspended twice for excessive losses. GM's stock gained 1.6 percent in New York.
