The end of the road for car makers?

As the global business leaders are attending the 39th edition of he World Economic Forum (WEF). The man at the helm of the world fourth car maker, Carlos Ghosn delivers his economic outlook of year 2009.

Last year, during the 2008 edtion of the WEF, the President and Chief Executive Officer of Renault-Nissan was more optimistic about the car sales for 2008. Since then, the world entered a crisis and a recession for most of the western countries.

He explains how a crisis that had its roots in a segment of the US loan system that spread to the overall economy. And why it badly hit the world car makers.

Ghosn acknowledges that the main cause is the loss of confidence of investors. And confidence has no border. US consumers started to doubt about their financial institutions and people in Europe lost confidence too.

Car industry has been hit more than other any activities because 2/3 of car sales are made through credit. Consumers get loans to finance their automobile. If credit is scarce and expensive, people will wait for better conditions of credit and environment. Even if the need is here.

The worse is yet to come in 2009. 69 million cars were sold in 2007, 63 million in 2008. and Renault-Nissan expects 55 million in 2009, representing a 14% drop.

Much is pexpected from stimulus packages and governmental actions to support the industry ans boost demand. Or at least to smoothen the decline!

Hope is coming from the emerging countries, whose demand is still high, despite an important correction.

To watch the interview, click on the video.