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Carmakers tackle profit problems | |
(about 2 hours later) | |
Three of the world's top carmakers have unveiled plans to help their businesses survive as the industry faces huge losses and slumping consumer demand. | Three of the world's top carmakers have unveiled plans to help their businesses survive as the industry faces huge losses and slumping consumer demand. |
Ford, the second-biggest US carmaker, lost $8.7bn (£4.3bn) in three months and plans to revamp its vehicle line. | Ford, the second-biggest US carmaker, lost $8.7bn (£4.3bn) in three months and plans to revamp its vehicle line. |
French car manufacturer Renault has said it will cut its European workforce by 5,000, while Germany's Daimler has trimmed its 2008 earnings outlook. | French car manufacturer Renault has said it will cut its European workforce by 5,000, while Germany's Daimler has trimmed its 2008 earnings outlook. |
High fuel and raw material prices have all buffeted carmakers' profits. | High fuel and raw material prices have all buffeted carmakers' profits. |
Car manufacturers such as Ford whose line-up includes bigger models like sports utility vehicles (SUVs) and large trucks are now having to switch to making smaller, less profitable vehicles. | Car manufacturers such as Ford whose line-up includes bigger models like sports utility vehicles (SUVs) and large trucks are now having to switch to making smaller, less profitable vehicles. |
Less thirsty? | Less thirsty? |
On Thursday, Ford surprised the market by reporting a higher-than-expected $8.7bn second-quarter net loss, compared with a net profit of $750m a year earlier. | On Thursday, Ford surprised the market by reporting a higher-than-expected $8.7bn second-quarter net loss, compared with a net profit of $750m a year earlier. |
It has attributed the steep decline to lacklustre sales of its large sports utility vehicles (SUVs) and pick-up trucks, as many consumers look for more efficient models. | It has attributed the steep decline to lacklustre sales of its large sports utility vehicles (SUVs) and pick-up trucks, as many consumers look for more efficient models. |
In response, Ford will add more smaller vehicles to its line up and transform three large truck and SUV plants to small car manufacturing bases in December. | In response, Ford will add more smaller vehicles to its line up and transform three large truck and SUV plants to small car manufacturing bases in December. |
It will also double its production of four-cylinder engines by 2011 and has decided to delay the launch of what it was touting as a new-and-improved F-150 pick-up truck. | It will also double its production of four-cylinder engines by 2011 and has decided to delay the launch of what it was touting as a new-and-improved F-150 pick-up truck. |
Ford had planned to return to profitability during 2009, but worsening economic conditions and declining sales have forced it to shelve that target. | Ford had planned to return to profitability during 2009, but worsening economic conditions and declining sales have forced it to shelve that target. |
Voluntary redundancy | Voluntary redundancy |
Renault said its plan to cut jobs through voluntary redundancies was prompted by the deteriorating economic outlook. | Renault said its plan to cut jobs through voluntary redundancies was prompted by the deteriorating economic outlook. |
Renault, the sixth-largest car maker in Europe, said it was now scaling back its production targets because of weak sales in Spain, Italy and the UK. | Renault, the sixth-largest car maker in Europe, said it was now scaling back its production targets because of weak sales in Spain, Italy and the UK. |
The French car maker had planned to produce 3.3 million vehicles this year but said it would miss that target by 300,000. | The French car maker had planned to produce 3.3 million vehicles this year but said it would miss that target by 300,000. |
As well as weaker sales in Europe, its production in Iran has been lower than expected this year. | As well as weaker sales in Europe, its production in Iran has been lower than expected this year. |
Renault started making the Logan model in Iran in March 2007, with 100,000 being sold in the first week of production. | Renault started making the Logan model in Iran in March 2007, with 100,000 being sold in the first week of production. |
Overall Renault said it was looking to cut its costs by 10% and that it would go ahead with a previously announced increase in car prices to offset a rise in the costs of its raw materials. | Overall Renault said it was looking to cut its costs by 10% and that it would go ahead with a previously announced increase in car prices to offset a rise in the costs of its raw materials. |
Despite the downbeat outlook, the company reported that its worldwide sales rose by 2.3% in the first half of this year. | Despite the downbeat outlook, the company reported that its worldwide sales rose by 2.3% in the first half of this year. |
As a result its half year net profit rose from 1.07bn euros (£843m; $1.68bn) to 1.5bn euros. | As a result its half year net profit rose from 1.07bn euros (£843m; $1.68bn) to 1.5bn euros. |
Missing targets | Missing targets |
Germany's Daimler, which makes models such as Mercedes, has also suffered from high raw material and fuel costs. | Germany's Daimler, which makes models such as Mercedes, has also suffered from high raw material and fuel costs. |
Although still profitable, the company announced that its future profits would be less than expected. | Although still profitable, the company announced that its future profits would be less than expected. |
The company said it now expected earnings of more than 7bn euros in 2008. It had expected earnings of more than 7.7bn euros it made last year. | The company said it now expected earnings of more than 7bn euros in 2008. It had expected earnings of more than 7.7bn euros it made last year. |
Its second-quarter earnings fell, dropping 4% to 2.05bn euros, compared to the same period a year earlier. | Its second-quarter earnings fell, dropping 4% to 2.05bn euros, compared to the same period a year earlier. |