Car giants stumble amid global slowdown

TOKYO/WASHINGTON (Reuters) - Vehicle sales in emerging markets won't compensate for plunging markets elsewhere, car and truck makers indicated on Tuesday, as they applied the brakes to plans in India and South America.

As the fate of the U.S. auto industry and millions of jobs hung in the balance while negotiations continued in Washington over a proposed $15 billion bail-out to prevent the collapse of General Motors Corp, Chrysler LLC and Ford Motor Co, rivals Renault and Nissan signaled cuts to their production plans for India, previously seen as a major growth market.

"We are maintaining our project for a start in 2010 but the start-up will be slower than originally planned due to the global financial and economic crisis," said a spokesman for Renault SA, which had envisaged producing a range of vehicles, including a very low-cost car, in conjunction with Nissan Motor Co.

Chinese car maker Chery Automobile said on Tuesday it had ended talks with Chrysler to sell cars in South America. It had agreed to make compact cars under the Chrysler badge for sale there but said that both parties had now decided to end the discussions.

U.S. automakers have long seen emerging markets as their long-term target. Ford, which makes mid-sized Focus sedans with Chongqing Changan Automobile Co, the listed arm of Changan Automobile Group, reportedly held talks last month over the possible sale of its Volvo car business to Changan. Neither Ford or Changan could be reached for comment on Tuesday.

Nissan and Renault said their planned joint venture car factory in India will start as scheduled in the first half of 2010 but at one shift rather than the initially planned two, though still intended to grow to annual production capacity of 400,000 cars by 2015.

The two automakers, still bit players in the Indian market, have a broad range of projects, from building passenger cars to commercial vehicles, as they try to catch up with leaders such as Maruti Suzuki India Ltd, Tata Motors Ltd and Hyundai Motor Co.

Nissan said it would also delay the start of light commercial truck production with Indian partner Ashok Leyland Ltd by six months to as late as September 2011 in view of plunging truck sales in India.

Truck demand in India, the world's fourth-largest market for commercial vehicles, had been expected to grow as the government improves roads and invests in infrastructure. But a slowing economy has resulted in a liquidity crunch and a sharp drop in construction activity, squeezing demand in recent months.

Heavy truck sales at Ashok Leyland, India's second-biggest bus and truck maker, slumped 67 percent in November, and those at top-ranked Tata slid as much as 60 percent. Both have taken steps to reduce production to avoid a build-up of inventory, with Tata shutting plants for up to six days.

FOCUS ON THE HILL

U.S. lawmakers, meanwhile, were set for another day of intense talks with automakers over the proposed extension of emergency loans to stave off their financial collapse.

Pressure to reach an agreement has mounted since Friday when it emerged that the U.S. economy shed more than 530,000 jobs during November. More than 350,000 people are directly employed in the auto industry and millions of others depend on it for their livelihood.

President George W. Bush has voiced concern about the automotive industry's ability to survive.

The administration has maintained that any plan must include best efforts to guarantee taxpayer dollars are paid back and that the automakers are able to reorganize and compete.

(Writing by Marcel Michelson; editing by Gus Dresser, John Stonestreet)