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WRAPUP 2-Toyota losses mounting, US parts firms seek aid

Published 02/06/2009, 03:41 AM
Updated 02/06/2009, 03:48 AM
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* Toyota posts big Q3 loss, trebles FY loss forecast

* U.S. auto suppliers seek government bailout

* Moody's downgrades Toyota, first time in a decade

* Truckmaker Volvo skids to Q4 loss

* Korean SUV maker Ssangyong wins creditor protection

By Chang-Ran Kim and Kevin Krolicki

TOKYO/DETROIT, Feb 6 (Reuters) - Toyota, the world's top auto maker, said its losses were ballooning as global car sales slide, and U.S. auto parts suppliers pushed for government aid to save their companies and hundreds of thousands of jobs.

A sudden collapse in consumer demand last year and turmoil in credit markets have battered automakers, forcing them to cut production and shed jobs, adding to the global economic gloom.

Related industries are also reeling.

The U.S. auto supply industry, which employees more people directly than auto manufacturers, said it was in talks with the U.S. Treasury to secure emergency funding to avoid a wave of bankruptcies.

Toyota Motor Corp warned on Friday that its operating loss for the year to end-March would be 450 billion yen ($4.95 billion), three times the loss it had forecast just six weeks ago.

Toyota's sales fell 34 percent last month in the United States, its biggest market, and 23 percent in Japan, as recession gripped major economies.

"This is absolutely awful. The earnings situation has obviously deteriorated since last October when the company's stock price plunged," said Yoshinori Nagano, chief strategist at Daiwa Asset Management in Tokyo.

"Hopes for U.S. economic (stimulus) steps have supported the company's stock since then. Still, if something goes wrong on that front, that could batter the stock price once again."

Toyota posted an operating loss of 360.5 billion yen for October-December. The Japanese firm has already let most temporary workers go, and could cut full-time jobs in Britain and North America, a company source said.

Predicting further pain for the world auto industry, Moody's Investors cut its credit rating on Toyota for the first time in a decade.

In Europe, world-number two truck maker Volvo said it slipped to a surprise operating loss in the fourth quarter amid plunging demand and warned that key markets were likely to fall further this year.

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Toyota's grim forecast came as U.S. parts suppliers pressed for government aid, and as President Barack Obama urged swift passage of a $900 billion stimulus package for the world's largest economy.

The auto suppliers have requested some $25 billion in assistance, an amount that would double the U.S. government's commitment to the auto sector at a time when sales are at their lowest since the early 1980s.

"The key now is whether consumers in America will be able to start securing loans again," Daiwa's Nagano said.

"Slumping sales due to the dismal state of the economy may be inevitable, but another big problem today is that consumers who can normally get loans can't get them."

Bob McKenna, president of the Motor & Equipment Manufacturers Association warned that the parts industry has been shut off from credit at a time when orders from automakers are shrinking.

Major problems at auto suppliers could quickly cripple or shut down car and truck production.

"Without immediate credit availability, an onslaught of supplier company bankruptcies is inevitable in the coming weeks and months, which would have a devastating, long-term effect on the U.S. economy," McKenna said in a statement.

Delphi Corp, the biggest parts supplier to General Motors Corp, said on Thursday it was seeking court permission to eliminate healthcare benefits for 15,000 salaried retirees. Delphi has been under bankruptcy protection since 2005.

GM itself is restructuring under a $13.4 billion government bailout, and along with Chrsyler LLC is racing to meet a Feb. 17 deadline to show U.S. officials they can be made viable after receiving massive public aid.

In South Korea, cash-strapped SUV maker Ssangyong Motor Co secured protection from creditors, but may struggle to revive in the near term or find new owners after it posted four loss-making quarters on plunging sales.

Ssangyong, which employs 7,100, is South Korea's first big corporate casualty as the global recession batters Asia's key export markets.

Difficulties with parts suppliers prompted Russian carmaker AvtoVAZ, which is 25 percent-owned by Renault, to halt its assembly line indefinitely, the Kommersant newspaper said, quoting AvtoVAZ's president. (Additional reporting by Reuters bureaux worldwide) (Writing by Kim Coghill; Editing by Ian Geoghegan)

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