Car market decline spurs fresh ‘Big 3’ merger talk

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Paris, Oct 17Paris, Oct 17: potential lenders were providing strong support for merger talks between GM and Chrysler as major banks such as JPMorgan Chase & Co are eager to cut their exposure to the auto sector.

Japanese media said that Ford was finalizing plans to sell shares in Mazda Motor Co to about 20 Japanese firms including insurers. Ford is considering selling some of its 33.4 percent stake in Mazda.

There are also recurring rumors that GM could sell its Saab brand in Europe. It is already trying to sell the Hummer brand.

European car sales fell 8.2 percent year-on-year in September as the fall-out from the financial crisis hit auto manufacturers hard, manufacturers’ association ACEA said.

The credit crunch is hampering the automotive sector’s ability to finance its daily operations and invest in new technologies for greener vehicles, it said on Wednesday.

ACEA renewed a call to governments to help fund the development of fuel-efficient technologies and said capital expenditure by carmakers in the past decade had pushed them to the limit of their competitive edge. Reuters

The Dow Jones Stoxx Index for auto shares was down 3.23 percent at 6:17 a.m. EDT. Morgan Stanley cut European auto maker’s price targets while Goldman Sachs raised BMW and Renault but cut Fiat.

In Clermont-Ferrand, central France, tire group Michelin was demonstrating some of its new technologies.

Managing partner Didier Miraton told journalists that the current crisis was impacting the company as others, but Michelin was more resilient than carmakers. He said a recent decline in raw material prices from record highs would not have an impact on results until the second half of 2009.British car retailer Inchcape on Friday issued a profit warning because the UK market is dropping fast.