Green cars take back seat in auto recession
By JAMES R. HEALEY and CHRIS WOODYARD
USA Today
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LOS ANGELES — The arrival of more fuel-efficient cars and trucks promising cleaner air and more energy independence is being set back as automakers worldwide scramble to hoard cash in an industry meltdown.
Carlos Ghosn, CEO of Japan's Nissan Motor and France's Renault, last week warned that automakers "can't find the financing" for aggressive development of so-called green cars.
In a keynote speech at the L.A. Auto Show media preview, Ghosn said companies must husband cash to survive an auto recession expected to last until 2010.
He said they can't afford now to divert money to electric and other alternative vehicles, which are expensive to develop. Among recent examples:
The crossover using a sophisticated two-mode system developed with Daimler, Chrysler and BMW was to have gone on sale in December. It now is planned for some time in the first quarter of 2009.
"It will help save some costs, and it dominoes down the line," says Saturn spokesman Steve Janisse.
In addition to postponing costs for distribution to dealers and marketing, Janisse says, "We can put off the expense of dealer training, and the dealers can put off buying special equipment to service the vehicle. It helps everybody right now."
New hybrids and other advanced technologies usually are small-volume vehicles and far costlier to produce than high-volume products. They typically produce lower profits and may lose money at first.
"All (the automakers) are struggling with cash flow. They have to decide what products to deliver," says Brett Smith, assistant director for technology at the Center for Automotive Research. U.S. automakers General Motors, Ford Motor and Chrysler are pleading for federal money to survive the downturn.
Ghosn said Nissan earnings in the fiscal half ending next March 31 will "not be zero, but very far from it, and by the way, most of our competitors are in the same conditions — except the ones in denial."
Ghosn sees a role for governments, citing the U.S. $25 billion loan plan for automakers to develop more fuel-efficient vehicles.
"I think the U.S. is being taken as a kind of benchmark, and you will see other programs (in Europe and Asia)" he said. "Financing for these kind of products is absolutely essential, and only states can do it."
Still, companies showed here that they haven't abandoned alternatives. Ford announced more hybrid cars. GM said its Chevrolet Volt electric car is still on track for in 2010, while Nissan promised to sell pure electric vehicles in the U.S. in 2010. And Honda said its hybrid-only Insight to rival Prius will arrive next year.
Eli Hopson, spokesman for the Union of Concerned Scientists, says he hopes automakers think twice about pulling back on hybrids. Currently lower gas prices are expected to rise again once global oil demand recovers. That, he says, will refuel strong hybrid demand.
"It's important the companies be ready to make the kids of cars and trucks consumers want to buy when the economy rebounds," he said.
