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Carmakers' results still weak

City A.M. Reporter
AUTOMAKERS in Europe and Japan unveiled weak results for the first half of the year yesterday and are set to keep tight control over costs but most predict an improvement in conditions for rest of 2009.<br /><br />Europe&rsquo;s largest car maker Volkswagen said second quarter profit sank sharply as France&rsquo;s Renault swung into a first-half loss but said it would increase production as the outlook had improved.<br /><br />In Japan carmakers Mazda Motor and Mitsubishi Motors also posted losses for a third straight quarter but kept their annual forecasts unchanged, relying on cost cuts to offset the weak demand.<br /><br />Volkswagen&rsquo;s net profit for the three months to 30 June was &pound;283m, down 83 per cent from the same period a year ago. Operating profit fell 56 per cent to &pound;928m but far exceeded average analyst expectations for &pound;628m profit. Renault, which has a 44 per cent stake in Japanese carmaker Nissan, said its first half net loss was &pound;2.712bn against a net profit for the same period in 2008 of &pound;1.467bn and forecasts for a &pound;2.36bn loss.<br /><br />Carmakers have seen sales crumble in the past 12 months due to global economic downturn and tight credit markets that have already driven US rivals General Motors and Chrysler to bankruptcy and restructuring.<br /><br />Renault now expects the world automotive market to fall 12 per cent in 2009 compared with last year to over 57m units, an improvement over its earlier forecast of a 15 per cent contraction this year.<br /><br />Companies are squeezing costs to reduce losses as production capacity remains underused, but they mostly foresee an improvement in output for the rest of the year as they bring inventory under control.