Japan car lobby sees tough 2009

A man walks past Honda Motor Co. cars at a showroom in Tokyo January 30, 2008. The global auto market will remain depressed next year as U.S. economic woes grip the rest of the world, with Japanese car sales likely to be the worst in at least three decades, the head of an industry lobby said on Thursday.

TOKYO (Reuters) - The global auto market will remain depressed next year as U.S. economic woes grip the rest of the world, with Japanese car sales likely to be the worst in at least three decades, the head of an industry lobby said on Thursday.

Desperate U.S. automakers are seeking billions in government aid, shutting down plants and reportedly reconsidering mergers to ride out a collapse in demand brought on by the credit crunch and global financial crisis.

In the latest sign of gloom for Japanese automakers, Honda Motor Co (7267.T) forecast on Wednesday an operating loss of 190 billion yen ($2.2 billion) for the six-month period to March, sending its shares down 3.5 percent on Thursday. It was the third profit warning in five months for Japan's No.2 automaker, which like its local rivals, is suffering due to the strong yen .

"It's very difficult to gauge where the bottom is (for the global car market)," Satoshi Aoki, chairman of the Japan Automobile Manufacturers Association (JAMA) told a news conference.

"What seems clear is that a recovery isn't around the corner, and I have no idea when we'll see one," Aoki, also chairman of Honda, said.

Announcing its outlook for 2009, the industry group said it expects Japanese demand for new cars, trucks and buses, including 660cc minivehicles, to fall 4.9 percent to 4.86 million vehicles, predicting the first drop below 5 million in 31 years.

That would mark the fifth straight year of decline in Japan, the world's third-largest car market after the United States and China.

For a graphic on Japanese auto demand, click: here

U.S. WOES

Aoki also predicted the U.S. light vehicle market to fall around 6 percent to 12.5 million units next year, from an estimated 13.3 million in 2008 and down 23 percent from 2007's 16.2 million.

That would be the lowest level of annual U.S. sales since 1991.

Weak consumer sentiment and tight credit have combined to send U.S. sales down 17 percent so far this year, forcing automakers to scale back production and rein in inventory.

Chrysler LLC is set to idle factories in the United States, Canada and Mexico for one month starting Friday, underscoring the urgency of pleas by Chrysler and General Motors Corp (GM.N) for an immediate bailout they say is their best hope for near-term survival.

Desperate to avoid bankruptcy, Chrysler owner Cerberus Capital Management CBS.UL took the initiative to restart talks for a possible merger with GM, the Wall Street Journal reported, citing people familiar with the discussions.

GM and Chrysler could not be reached immediately for comment, but GM CEO Rick Wagoner told the U.S. Senate Banking Committee earlier this month that he would consider a merger with Chrysler if that were the condition for receiving federal funding.

The two U.S. automakers announced steps to shore up their dwindling cash on Wednesday as they awaited word on whether the White House would grant them billions of dollars in emergency loans.

HELP NEEDED, UP TO A POINT

JAMA's Aoki said the health of the U.S. auto industry was crucial for the health of its entire economy, and by extension the world's, but warned against excessive aid that would flout fair competition.

"If the (government) aid is too discriminatory and favors only the Detroit Three, this would not be desirable under the notion of free trade," he said.

Aoki also limited his jawboning on the dollar, stopping short of directly calling for intervention to weaken the yen, but warning that volatile swings would cripple Japanese industry.

"Sudden forex moves, especially big ones, will not only hurt short-term corporate profitability but also make it very difficult for companies to make medium to long-term plans," he said.

The dollar stayed in sight of a 13-1/2-year low versus the yen, fetching around 87.75 yen on Thursday.

($1=87.73 Yen)

(Additional reporting by Kevin Krolicki in DETROIT, John Crawley in WASHINGTON; Editing by Lincoln Feast)