Automotive News Europe - January 19, 2009 - 2

PAGE 2 · www.autonewseurope.com January 19, 2009 Automotive News Europe Inside this issue Give it some gas 4 As Russia turns off the gas pipelines through Ukraine, car factories in eastern Europe are forced into shutdowns No gas, no go in some European car plants Breitschwerdt won big with ‘Baby Benz’ Former Mercedes CEO to join Hall of Fame Hurtej Kaur Automotive News Europe When Mercedes-Benz launched the so-called “Baby Benz” in 1982, Werner Breitschwerdt’s reputation was on the line. The 190, the forerunner to the C class, was Mercedes’ smallest and most affordable car. As chief engineer, Breitschwerdt took a great risk championing a car some felt would not match the quality and performance of the company’s larger sedans. “A lot of people said you can’t make such a small car like that as a Mercedes, but we showed we could do it, and it was a very good Mercedes,” the Stuttgart native told Automotive News Europe. A year after the 190 was launched Breitschwerdt was promoted to CEO. High demand for the car helped Mercedes boost its global unit sales to 604,447 from 481,845 during Breitschwerdt’s tenure as CEO from 1983-1987. The success of the car is one of the reasons that Breitschwerdt, 81, has earned a place in the European Automotive Hall of Fame. In March, he will join three other Class of 2009 inductees in the Hall: Ferrucio Lamborghini, prolific independent sports car designer Giovanni Michelotti, and Hub van Doorne, the founder of car and truck maker DAF. Click and buy 12 Car buyers are turning to the Internet not just to research their purchases but to place their orders Car ownership is only a mouse-click away All loved up 16 How Ford’s Cologne plant became the Love Factory for the Fiesta launch Ford’s Fiesta factory is funky and efficient Motown hits 19 German carmakers provided most of the product highlights in Detroit Many people told Breitschwerdt that Mercedes should not make a small car. He is glad he didn’t listen. As Daimler-Benz’s chief engineer Breitschwerdt led the development of the flagship S class, the W124 series – predecessor to the E class – and the SL series, all cars that helped to cement Mercedes’ reputation as an automotive engineering and design leader. “My job was making cars and it was my hobby as well,” he said. After four years as CEO, Breitschwerdt stepped down from the job shortly before his 60th birthday. He served as a member of Mercedes parent Daimler-Benz’s supervisory board from 1988 to 1993. Since leaving the board, Breitschwerdt has remained a popular figure in the industry. Speaking about electric cars, Hall of Fame induction event Date: Tuesday, March 3, 2009 Where: Hotel InterContinental, Geneva, Switzerland Dress Code: Business attire Tickets: €185 each; €1,850 table of 10 7:00pm: Cocktail Reception 7:45pm: Dinner and 2009 member inductions For more information go to: www.autohalloffame.org he said: “I think they can be made for towns and cars with diesel engines for long distances.” Despite the current economic squeeze, Breitschwerdt is confident that cars produced today by his former employer will remain popular. “Mercedes cars are very stable in their price for used cars and therefore people buy them because they know they can sell them in five years at a good price,” he said. “Premium cars will be very important for people in the future, as they have ANE been in the past.” Audi’s Sportback wowed Motor City Heading south 20 Shareholders have seen major declines in the automotive sector, with few positive signs on the horizon Job and a hobby Breitschwerdt joined Daimler-Benz’s car testing department in 1953. During a career that lasted four decades, Breitschwerdt says he had many memorable moments. One of them came in 1974, when the talented engineer became head of design in addition to director of car body development. Correction Cadca is in Slovakia. The city was misplaced on a map that appeared on Page 8 of the January 5 edition. Company Index These companies appear in stories in this issue of Automotive News Europe Audi . . . . . . . . . . . . . . . . . . .18 Beru . . . . . . . . . . . . . . . . . . .20 BMW . . . . . . . . . . . . . .1, 7, 18 BorgWarner . . . . . . . . . . . . .17 Changhe . . . . . . . . . . . . . . . . .8 Daimler . . . . . . . . . .2, 8, 9, 18 Fiat . . . . . . . . . . . . . . . . . . .4, 6 Ford . . . . . . . . . . . . . .3, 16, 18 General Motors . . . .3, 11, 17 Honda . . . . . . . . . . . . . . . . . .6 Jaguar Land Rover . . . . . . .18 Kia . . . . . . . . . . . . . . . . . . .3, 22 Kongsberg . . . . . . . . . . . . . .20 Lifan . . . . . . . . . . . . . . . . . . . .8 Opel . . . . . . . . . . . . . . . . . . .12 Porsche . . . . . . . . . . . . . .1, 18 PSA . . . . . . . . . . . .1, 3, 12, 22 Renault . . . . . . . . .1, 3, 12, 14 Saab . . . . . . . . . . . . . . . . . . . .1 Toyota . . . . . . . . . . .6, 17, 23 Volkswagen 1, 3, 6, 7, 18, 22 Carmakers face ‘dire’ financial situations From Page 1 ACEA, the European carmakers association. (See related story, Page 4) Citigroup sees the market dropping 15 percent in 2009, while Goldman Sachs projects an even larger 20 percent decline. If these projections are correct, total European sales would fall by between 2.2 million and 2.9 million new cars in 2009, which Citigroup says would erase more than ¤9 billion in profits from car companies’ bottom lines. The global credit crunch is preventing carmakers’ captive finance arms from supporting new-car sales or contributing their traditional share of automaker profits. Tight monetary conditions also are raising the cost of borrowing, which further weakens companies’ financial outlooks. Weak sales in the US and slowing demand for cars in emerging markets will worsen the outlook, leading to Citigroup’s prediction of “dire” financial situations for most automakers during 2009. Goldman Sachs. “Survival is really a question of how healthy you were going into it.” While European automakers already have reacted to the slowdown with a range of cost-cutting measures, all experts contacted by ANE said more should be expected in the coming years. “Major capacity adjustments are necessary,” said Albrecht Denninghoff, a Frankfurt-based analyst with Germany’s BHF-BANK. “There have been some temporary programs, but the permanent capacity reduction programs are still to come.” Factory closures in Europe usually entail high front-end costs as workers are let go, but the long-term effects “should be positive for the cost side of the balance sheet,” Denninghoff said. To slow cash burn, which Citigroup estimates at more than ¤32 billion over the 2008-2009 period, automakers can also be expected to cut investment in new platforms, technologies and production sites in developing markets. Goldman Sachs forecasts an average 20 percent decline in capital expenditure this year. Analysts agree that a number of unknown factors still could affect the market. An easing of credit conditions could help revive sales, while greater government assistance to carmakers at the national or European level could limit the financial squeeze. “We are in uncharted territory, and there’s not much evidence where it’s going,” Sanford Bernstein’s Warburton said. “If I was running a car business I would be extremely ANE concerned.” How’s your health? Companies with relatively low margins during 2008, such as BMW, PSA and Renault, are expected to suffer more than Daimler, Fiat, or Volkswagen, all of which are expected to report operating margins above 5 percent in 2008. “I don’t think the crisis differentiates between companies,” said Stefan Burgstaller, a London-based analyst with Vol. 14 No. 2. Automotive News Europe is published bi-weekly by Crain Communications GmbH, Argelsrieder Feld 13, 82234 Oberpfaffenhofen, Germany. Periodicals postage paid at Detroit, MI. 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Automotive News Europe - January 19, 2009

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