Q+A-How are Asian rivals reacting to Chrysler's bankruptcy?
Chrysler LLC [CBS.UL] filed for bankruptcy on Thursday and announced a deal to link up with Italy's Fiat SpA (FIA.MI) after failing to reach agreement on the restructuring of its debt.
Here are questions and answers on how Asia's major carmakers are reacting.
Operationally, Chrysler's bankruptcy will likely cause or speed up failures at suppliers and subcontractors, meaning automakers that also depend on them would have to prop them up or find other sources for components, sometimes through the costly option of flying them in from other regions.
Honda Motor Co (7267.T) says around 15 percent of its suppliers in North America depend on the Detroit Three for their core business.
Indirectly -- and depending on how the bankruptcy proceeds in court -- automakers in the United States could be hit by another wave of credit tightening as debt-holders lose out, leading to a further drop in sales. More job losses could also damage consumer sentiment and keep showrooms empty.
WHAT ABOUT PARTS MAKERS?
Few Asian companies are among those with the biggest unsecured claims to Chrysler. Japan's Denso Corp (6902.T), which sold 43 billion yen ($441 million) worth of parts to Chrysler last financial year, has an exposure of $18.7 million. Unlisted Yazaki Corp has $18.3 million in unsecured claims.
Some parts makers are considering applying for government support against their claims, although the aid framework is limited to $5 billion. Japanese suspension maker Yorozu Corp (7294.T) is among those that have already applied.
Toshihiro Nikai, Japan's trade minister , said on Friday the government would take "solid steps" to mitigate the impact on auto parts suppliers from Chrysler's bankruptcy. He did not elaborate.
WHAT CONTINGENCY PLANS ARE AUTOMAKERS PREPARING?
Those with a big manufacturing base in North America such as Toyota Motor Corp (7203.T) and Honda are on heightened alert for possible disruption to supplies from Chrysler's parts makers.
Toyota has begun stocking extra components whose sources are limited, and is on alert for disruption at 30 to 40 of its 100 or so suppliers. Honda says it is closely watching a few suppliers, and is looking at possibly extending financial support in a worst-case scenario.
WHAT ARE RIVALS SAYING ABOUT THE TROUBLE IN DETROIT?
Japanese executives had always hoped for a solution outside of bankruptcy, but have more recently toned down their musings to a more realistic scenario.
Mitsubishi Motors Corp (7211.T) President Osamu Masuko said this week he would like a "positive" conclusion, although he added that a Chrysler bankruptcy would have no direct impact on Mitsubishi Motors.
The two were once linked through a capital alliance between Mitsubishi Motors and the former DaimlerChrysler that ended bitterly in failure.
A spokesman at Toyota said the automaker hoped that Chrysler's operations would stabilise swiftly and lead to a healthy development for the U.S. auto industry as a whole.
Some executives have admitted that a slimmed-down Detroit Three would give other brands more business in the long run. It would also ease the chronic problem of excess capacity that has pushed the industry into detrimental price wars in the past.
HOW HAS THE MARKET REACTED?
Japanese auto shares have been resilient, trading higher on Thursday even as a bankruptcy filing started to appear imminent.
In the year to date, Tokyo's transport sector subindex .ITEQP.T has risen nearly 40 percent.
[Source: By Chang-Ran Kim, Asia autos correspondent, Reuters, Tokyo, 01May09]
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|This document has been published on 01May09 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.|