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3rd UPDATE: Auto Sales Remain Bleak In April; Toyota Lags

Despite bankruptcy, Chrysler still has fans who say car company will survive

When it comes to car buying, a good deal’s a good deal – even if it’s offered by newly bankrupt auto giant Chrysler.

“It’s still a great, classic American car,” said Darnell Leacock, the proud new owner Thursday of a 2008 Chrysler 300. “The company’s going through an adjustment.”

The 27-year-old Cambria Heights resident was among the optimists at Star Chrysler Jeep & Dodge in Queens Village, where three cars were sold in one day despite the company’s latest financial mess.

“People who think Chrysler is going down are nuts,” said Michael Vega of Franklin Square, L.I.

While the carmaker didn’t get deep-sixed, it was bruised and bloodied after filing for bankruptcy protection.

The once-unthinkable move was followed by word that its embattled CEO was leaving and its plants would temporarily close Monday.

It took a deal with Italian automaker Fiat and another $8 billion in federal bailout money to save the Michigan-based firm from the corporate junkyard.

Despite the setbacks, the company launched in 1925 will continue car sales as usual – and emerge in two months “stronger and more competitive,” President Obama predicted.

“No one should be confused about what a bankruptcy process means,” Obama said. “This is not a sign of weakness, but rather one more step on a clearly charted path to Chrysler’s revival.”

The government will back Chrysler’s warranties in the bankruptcy period. The President promised consumers that buying or servicing the company’s cars won’t be affected.

Chrysler’s plants will shut down for up to two months until the restructuring of its $6.9 billion debt is complete. The company has received $4 billion in government money.

Once the bankruptcy ends, CEO Robert Nardelli will leave after two disastrous years where the company’s sales and earnings tanked. He was disappointed when a deal to avoid the court filing failed just hours before an 11:59 p.m. deadline.

“We came into the last pit stop, had the car tuned up, and ran out of laps,” Nardelli told reporters.

Obama blasted hedge-fund creditors for submarining a proposal that would have spared Chrysler from bankruptcy.

“I don’t stand with those who held out when everybody else is making sacrifices,” he said.

Four banks holding 70% of Chrysler’s debt signed off on a deal to accept $2 billion – about 30 cents on the dollar. The hedge fund creditors, seeking a better payoff, declined to go along.

Fiat will get 20% of Chrysler in return for giving the American business access to its fuel-efficient technology.

Honda Forecasts 71% Profit Drop on Car Sales Plunge

April 28 (Bloomberg) — Honda Motor Co., Japan’s second- largest carmaker, forecast profit will drop 71 percent this fiscal year as the global recession and tighter credit cripples demand for cars.

Net income will drop to 40 billion yen ($417 million) in the year ending in March, compared with net income of 137 billion yen a year earlier, the company said in a statement today. Sales will fall 16 percent to 8.37 trillion yen.

Rising unemployment has hammered sales of Honda’s Civics and Accords in the U.S., Japan and Europe. Still, the Tokyo- based company’s earnings will likely be better than those of Toyota Motor Corp. and Nissan Motor Co. because of its motorcycle unit, the world’s largest.

“Things will start to look better from the second half of the year, but don’t expect consumer spending to be very strong in the U.S.,” said Edwin Merner, president of Tokyo-based Atlantis Investment Research Corp., which manages $3.1 billion. “Motorcycles are a bit of a plus for Honda.”

Toyota will forecast a net loss of 284 billion yen for the current year, according to the median of 19 analyst estimates compiled by Bloomberg. Nissan will forecast a net loss of 314 billion yen, according to the median of 18 analyst estimates.

Fourth-Quarter Loss

Honda posted a 186 billion yen net loss for the three months ended March, compared with net income of 25.4 billion yen a year earlier, it said.

The carmaker dropped 2.4 percent to 2,600 yen at the close of trading in Tokyo. The shares have increased 36 percent this year compared with a 26 percent gain for Toyota and a 46 percent rise for Nissan.

Honda’s U.S. sales plunged 36 percent in March to 88,379 units, as industrywide sales of cars and light trucks in the U.S. plunged 37 percent. The country’s jobless rate rose to a 25-year high of 8.5 percent last month.

The stronger yen, which gained about 10 percent on average against the dollar last quarter from a year ago, has also hurt Honda’s earnings, as the carmaker traditionally gets more than half its operating profit from North America. The stronger currency cut the company’s fourth-quarter operating profit by 26.8 billion yen.

Dividend Cut

Honda will cut its quarterly dividend to 8 yen a share. For this fiscal year, it will pay a total of 32 yen a share compared with 63 yen last year.

In addition to motorcycle demand, the company is also benefitting from growth in China. Honda’s sales in the country may rise 10 percent in 2009, twice the pace of the overall market, after it introduced revamped City and Fit compacts and Accord sedans, according to Senior Managing Director Atsuyoshi Hyogo.

Honda started selling the new Wave 110i small motorcycle in Thailand in January and will also introduce the model in Indonesia and Vietnam later this year.

Toyota, the world’s largest carmaker, will report earnings on May 8. Nissan, Japan’s third-largest automaker, will report earnings on May 12.

Sourced via bloomberg.com

2nd UPDATE: Audi 1Q Oper Pft -29%; Weak Demand For Luxury Cars

FRANKFURT (Dow Jones)–Audi AG (NSU.XE) said Monday that its first-quarter operating profit fell 29% amid waning demand for luxury cars, but it reiterated that, despite an anticipated fall in 2009 car sales, it still expects to fare better in the current industry gloom than its rivals.

“We remain confident to achieve a clearly positive result in the year 2009,” Chief Financial Officer Axel Strotbek said in a statement.

The premium brand and key earnings contributor of Volkswagen AG (VOW.XE), Europe’s largest automaker by sales, said first-quarter revenue was down 19% on the year to EUR6.7 billion from EUR8.3 billion amid lower car sales and unfavorable currency movements. Operating profit fell to EUR363 million from EUR514 million.

Audi said in recent years it had created “a sound basis on which to compete successfully even in economically difficult times,” but it couldn’t escape the effects of the global economic downturn.

“Additional measures have been taken in order to cushion the impact which the … downturn in demand is anticipated to have on profits (in) 2009,” Audi said.

Audi’s first-quarter car sales fell 16% year-on-year to 210,027 vehicles, a fall that was less severe than at its rivals due to solid demand for revamped and new models such as the Q5 sports-utility vehicle.

The world’s best-selling premium automaker BMW AG (BMW.XE) posted a 21% sales fall at its core brand to 233,498 vehicles in the first three months of the year as the downturn in the U.S., BMW’s biggest single market, took its toll. The world’s second best-selling luxury car maker, Daimler AG’s (DAI) Mercedes-Benz unit, saw sales contract 25% compared with the first quarter of 2008 to 216,000 cars.

Last week, Audi parent Volkswagen said it couldn’t give a reliable forecast for this year due to market volatility after it reported a 74% drop in first-quarter net profit to EUR243 million.

Executives had previously indicated that VW might make a loss in the first quarter, but the sale of its Brazilian truck operations kept it profitable. The Wolfsburg-based automaker’s first-quarter operating profit dropped 76% on the year to EUR312 million. Revenue fell 11% to EUR24 billion. Volkswagen is scheduled to post detailed earnings April 29.

Volkswagen doesn’t provide net profit on a quarterly basis for individual brands.

Sourced via online.wsj.com