By Hugh Lawson and Jongwoo Cheon
TOKYO/SEOUL (Reuters) – Credit ratings agency Moody’s put Honda Motor Co Ltd (7267.T) on review for a possible downgrade on Friday, while South Korean SUV maker Ssangyong filed for bankruptcy protection as the financial crisis further pounded the global auto industry.
Ford Motor Co (F.N) CEO Alan Mulally said there was little prospect of a turnaround anytime soon, warning U.S. auto sales would not see a real recovery until 2010, as the financial crisis squeezes credit and dents consumer confidence.
Auto makers worldwide have closed plants, cut jobs and extended holidays to try to clear stocks of unsold vehicles.
France’s Renualt (RENA.PA) said managing and reducing inventory would remain a priority this year after 2008 unit sales fell 4.2 percent.
“The automotive market in every developed market is in recession — particularly since October 2008 — which Moody’s believes will persist through 2009 and beyond,” the ratings agency said as it reviewed Honda’s Aa3 debt rating.
A credit ratings downgrade would increase the cost of borrowing for Honda, Japan’s No.2 automaker. The company has around $26 billion in long-term debt affected by the review, Moody’s said.
Last month, Honda cut its annual operating profit forecast by 67 percent to 180 billion yen ($1.97 billion) in its third profit warning this business year.
Demand was also slowing and possibly declining in some emerging markets, Moody’s said, evidenced by sluggish growth in Chinese auto sales released on Friday.
Honda shares fell 3 percent, compared with a 2.6 percent drop in Tokyo’s transport equipment sector .ITEQP.T. Honda shares have fallen more than a third in the last year.
The rating warning came as Ssangyong Motor Corp (003620.KS), the smallest of South Korea’s five automakers, filed for a court receivership after cash injections from its Chinese majority shareholder SAIC Motor Corp (600104.SS) proved insufficient to offset a collapse in sales.
Ssangyong said it would cut wages by up to 30 percent and push for staff to retire early to revive its business. Both the company’s chief executive and president resigned.
Shares in Ssangyong were suspended before the announcement, having fallen 77 percent in the past year.
Ford is the healthiest of the Big Three U.S. carmakers yet its U.S. sales fell about 20 percent in 2008 and it posted $8.7 billion in losses through the first nine months of last year as the downturn pushed U.S. auto industry sales to the lowest level in 16 years.
“We think that the economy is going to continue to contract, at least in the first two quarters,” Mulally told reporters at the U.S. Consumer Electronics Show in Las Vegas. “Our business really goes with economic development and the only thing we’re very concerned about is credit and consumer confidence.”
Rival General Motors Corp (GM.N), which won a $13.4 billion federal bailout to avoid collapse, said on Thursday it was confident it would win concessions from its main union to meet the conditions of its rescue package.
SALES SLIDE CONTINUES
Auto sales in the United States, the world’s biggest market, plunged 36 percent in December as the battered industry closed its weakest year since 1992, while December sales in Japan slid 22 percent to their worst on record for the month.
At one stage, the industry had hoped that emerging markets would ride to the rescue, but the sales slide is spreading.
Vehicle sales in Indonesia, Southeast Asia’s biggest economy, are likely to fall 30 percent this year, due to tight domestic liquidity and slower economic growth, Toyota’s distributor, PT Toyota Astra Motor, said.
“Liquidity in the market has gone, or is very, very limited,” said Johnny Darmawan, president director of Toyota Astra, in an interview on Indonesia’s Metro TV.
The auto industry rout has also hit motorcycle makers, and prompted a range of Japanese auto companies to pull the plug on their racing teams.
Kawasaki on Friday joined Honda, Subaru and Suzuki in pulling out of motorsport, because of the sick industry.
Kawasaki Heavy Industries Ltd (7012.T) said it was pulling out of motorcycling’s MotoGP world championship.
“In the current economic climate and unless the situation improves it is difficult to say if we will return,” Kawasaki spokesman Katsuhiro Sato told Reuters.
(Additional reporting by Alastair Himmer in TOKYO, Anupreeta Das in LAS VEGAS and Harry Suhartono in JAKARTA; Editing by Lincoln Feast)