Global car market is starting to recover, aided by US, Ghosn says

ERJ staff report (AN)

New Delhi, India (Reuters) -- The global car market has bottomed and is on track for 60 million units sales next year, aided by the United States, Carlos Ghosn, who heads Japan's Nissan Motor Co. and France's Renault SA, said on Sunday.

Ghosn said his global forecast for auto sales for this year was above his earlier expectation of 55 million unit sales.

"It looks like we are here hitting a plateau," he said at a World Economic Forum event in New Delhi.

"All plans of expansion and capacity can be resumed with a much more solid understanding of how this crisis will end up."

Global demand for cars skidded after the collapse last year of Lehman Brothers, with the drop most pronounced in the United States, which is on its way to being unseated by China as the world's biggest auto market.

Sales have been supported somewhat by government-backed incentives, but such stimulus steps have begun to expire in some countries, leaving the outlook for demand uncertain next year.

Global vehicle sales totaled roughly 70 million vehicles in each of the past two years.

Auto executives around the world have cautioned that sales could drop back to pre-stimulus levels without a convincing recovery in the global economy. Robust growth in emerging markets such as India and China are helping to absorb some of the pain.

"I don't believe in a double dip because we didn't come up," Ghosn said, referring to the prospect of a "double-dip" recession.

"The big question is when are we going to move up," he said.

He said pockets of economic recovery are emerging.

"It's very likely that we will start to move up in 2010, selectively, with obviously China, India, the Middle East, South America playing an important role. The United States also," he said.

"I'm afraid Europe, Japan are still going to have a tough year in 2010," he told reporters.

Nissan is 44 percent owned by Renault.

Patience in India

Renault's partnership with India's Mahindra & Mahindra to make the low-cost Logan car started off well, but sales soon began to dwindle, with high taxation making the car expensive for its target market.

Production last year was less than a third of capacity, and the joint venture lost 4.9 billion rupees ($105 million) in 2008-09.

Both parties in India have dismissed reports that Renault was planning to pull out of the venture and considering other partners, including Bajaj Auto, with which it already has a partnership.

India has been a recent bright spot for the global car market, with year-on-year sales rising at double-digit percentages during the three months through September.

Ghosn said he expects the India car market to triple in the next 10 years.

"I never thought coming to India we'd get it right the first time," he said. "We have the patience, the determination and we have the focus and hopefully the modesty to recognize when things are going well and things are not going well," he said.

"This is not a surprise; it is part of life."

From Automotive News (A Crain publication)