By Jui Chakravorty and Poornima Gupta
DETROIT (Reuters) - The major U.S. automakers, in the midst of a wrenching restructuring, have won sweeping labor concessions that promise to save billions of dollars in health-care costs and wages.
Now comes the hard part.
General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz), Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) and Chrysler LLC face the prospect that surging oil prices, tight credit and a weak housing market will prolong a slump in U.S. auto sales, slowing their turnaround efforts at a crucial point.
"I think next year is a challenging year," said Pete Hastings, a senior corporate bond analyst at Morgan Keegan. "We see a tough economy, a consumer less willing to spend, and I think we'll see these same conditions persist. Tighter lending standards are going to have an effect as well."
For investors and creditors tracking the U.S. auto industry's long-running effort to return to profitability, the risk of a slowdown or outright recession in the United States next year looms large.
There are other uncertainties as well. Can Detroit fund its costly restructuring and keep pace with ambitious rivals, led by Toyota Motor Corp (7203.T: Quote, Profile, Research, Stock Buzz), in developing fuel-saving technologies? Will tougher credit markets prolong a consolidation of the industry's battered supply base?
Those are among the questions that will be taken up by leading industry executives, investment bankers and labor leaders at the Reuters Auto Summit, being held in Detroit and Frankfurt November 18-21.
For major automakers, a big challenge remains the anemic U.S. market for new vehicles, with the Detroit-based carmakers widely seen as having the most at stake because of the pressure they face to reverse compounding losses. Continued...
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