Carmakers sound alarm at Paris show

Top automakers including General Motors and Ford warned of tough times during the Paris Auto Show amid concerns that slowing demand could force production cuts and job losses. The show ends on October 19.

Volkswagen's latest Golf and Toyota's new Avensis saloon for Europe headline the event, which opened under a cloud as makers struggle to attract buyers worried by slowing economies and as a global credit crisis hurts auto leasing.

Ford Motor Co. chief executive officer Alan Mulally said he expected no recovery in the global car market until 2010 and urged governments and central banks to work together to bring stability back to the financial markets.

GM's chief operating officer, Fritz Henderson, warned of weakness to come in both the US and western European markets."Certainly in the first half (of 2009) it's going to be weak," Mr Henderson said.

Mitsuo Kinoshita, senior board member at Japan's Toyota Motor Corp. said the credit crunch was hurting consumer confidence and could force Toyota to review its global sales targets of 9.5 million vehicles this year and 9.7 million for the next.

A source at Europe's biggest automaker, Volkswagen said that the company faced tough times at Spanish unit Seat and while the company's overall targets remain intact, it may have to consider trimming output.

Volkswagen chief executive officer Martin Winterkorn told reporters that VW expects to be able to generate a small gain in unit sales and revenue next year despite turmoil on financial markets, while confirming VW's outlook for this year.

Major automakers reported a 26 per cent plunge in US September sales, including Ford off 34 per cent and Toyota down 32 per cent, its steepest decline since 1987.

Auto executives said Americans had either walked away from vehicle purchases or been stymied by a lack of financing or requirements for larger down-payments.

Renault SA CEO Carlos Ghosn said at the show that no one could rule out difficult years for the auto sector in 2009 and 2010 and promised an update on its plans on October 23.

Renault outlined a job cuts plan last month.

European rivals Fiat and Peugeot-Citroen are also trimming costs to safeguard profits.

Peugeot CEO Christian Streiff told reporters at the show that the French maker had achieved €2 billion in cost savings in the past 18 months and expected "great progress" in cost reduction in the near future.

The firm is sticking to its 2010 objectives despite the market's tougher climate, Mr Streiff said.