South Korean auto makers take credit crisis action

By Hugh Lawson and Jongwoo Cheon

TOKYO/SEOUL (Reuters) - Two South Korean auto makers on Friday joined the industry line up of companies suffering in the global financial crisis, with Hyundai Motor Co (005380.KS) slashing output and Ssangyong (003620.KS) filing for bankruptcy protection.

Auto makers worldwide are suffering as consumer demand for vehicles plunges in the worst economic downturn since the Great Depression, which is expected to last well into 2009.

On Friday, Credit rating agency Moody's put Honda Motor Co Ltd (7267.T) on review for a possible downgrade, while Ford Motor Co (F.N) Chief Executive Alan Mulally said there was little prospect of a turnaround soon.

Mulally warned U.S. auto sales would not see a real recovery until 2010.

Car firms have closed plants, cut jobs and extended holidays to try to clear stocks of unsold vehicles. France's Renault (RENA.PA) said managing and reducing inventory would remain a priority after 2008 unit sales fell 4.2 percent.

At BMW (BMWG.DE), vehicle sales fell 4.3 percent in 2008 as a 5.8 percent decline in BMW brand deliveries offset record numbers for its Mini and Rolls-Royce brands.

"The automotive market in every developed market is in recession -- particularly since October 2008 -- which Moody's believes will persist through 2009 and beyond," the agency said as it reviewed Honda's Aa3 debt rating.

Last month, Honda cut its annual operating profit forecast by 67 percent to 180 billion yen ($2 billion) in its third profit warning this business year.

Demand was also slowing and possibly declining in some emerging markets, Moody's said, evidenced by sluggish growth in Chinese auto sales released on Friday.

Meanwhile, Hyundai -- the world's fifth largest auto maker -- plans to cut production at its domestic plants by 25 percent to 30 percent in the first quarter to offset a slump in demand.

Ssangyong, the smallest of South Korea's five automakers, filed for receivership.

SALES SLIDE CONTINUES

Auto sales in the United States, the world's biggest market, plunged 36 percent in December as the battered industry closed its weakest year since 1992, while sales in Japan slid 22 percent to their worst on record for the month.

Ford is the healthiest of the Big Three U.S. carmakers, yet its U.S. sales fell about 20 percent in 2008 and it posted $8.7 billion in losses through the first nine months of last year.

"We think that the economy is going to continue to contract, at least in the first two quarters," Mulally told reporters at the U.S. Consumer Electronics Show in Las Vegas.