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Global Economic Crisis Ravaging World’s Auto Companies

December 14th, 2008

America’s car industry is on the verge of extinction amidst the global economic crisis. The Senate tuned down a bill offering Detroit automakers a $14 billion dollar bridge loan. Now it is up to the Bush administration to grant the 3 domestic auto manufactures the money from its TARP fund for the temporary rescue of the Detroit automakers; TARP was originally set up by Congress to save the financial industry from the global economic crisis.

The downturn in the auto business is not only an American phenomenon. The global economic crisis has ravaged auto producers throughout the world. Among the major European car producers come warnings of a bleak and barren 2009. The indications are growing that the deepening crisis in the automobile sector is global, going beyond the American auto industry’s desperate life and death struggle.

Recently, the CEOs of Renault-Nissan and Fiat stated that the automobile markets would undergo sustained declines in 2009. This parallels the catastrophic sales declines that have pushed the American “Big Three,” Ford, GM and Chrysler, to beg for bailouts from the government. The global economic crisis is destroying demand for cars in virtually every market.

The world’s number one car company, Toyota Motor Corp, will be reporting a loss of about 100 billion-yen ($1.11 billion at current exchange) for October-March. This is according to Japanese media. If even Toyota is losing money and cutting automobile production, how many weaker car companies will become extinct during the global economic crisis? For the auto business, as with many other enterprises, the worst is yet to come as the global economic crisis picks up the pace of its destructive impact on the world economy and global financial system.

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