Italian car makers seek aid as suppliers warn of cutbacks

Italy's car industry met ministers yesterday to lobby for aid as key parts suppliers warned of further cutbacks in 2009, the UK looked for ways to unblock car financing and Audi's CEO lamented a "terrible" January.

As UK-based car makers digested Tuesday's government pledge of £2.3 billion in guaranteed loans, British aerospace and automotive engineer GKN Plc announced a further 1,400 layoffs in its automotive division and signalled more cuts in 2009.

In Germany, the world's biggest auto parts maker Robert Bosch said 2008 earnings before tax fell to 2.5 per cent of sales from 8.2 per cent a year earlier.

The figure was "clearly below the target line (and)... we have to be prepared for further negative developments in 2009," Chief Executive Franz Fehrenbach said late on Tuesday.

Meanwhile it emerged that German ball bearings maker Schaeffler has sounded out the possibility of a capital injection of up to £4 billion from the German government.

The heavily indebted group found itself paying about €10 billion when Continental shareholders tendered their stock en masse following a mandatory takeover bid.

Audi CEO Rupert Stadler said the Volkswagen unit had seen a significant decline in new orders in the past three months but vowed to proceed with strategic investments.

Top executives of Fiat, Italy's biggest manufacturer, met government ministers on Tuesday to lobby for incentives to get consumers buying cars again ahead of Wednesday's industry-wide gathering, which was scheduled for 1730 GMT.

According to news reports, the value of the packages the Italian government is prepared to offer lies between 260 million and €1.2 billion.

Fiat Chairman Luca Cordero di Montezemolo said on Wednesday he wanted a "clear, quick" decision after constructive talks with the government.

Fiat Chief Executive Sergio Marchionne has warned that 60,000 jobs are at risk if nothing is done to help the beleaguered sector.

Fiat, Europe's sixth largest carmaker, is in talks about a partnership with Detroit-based manufacturer Chrysler and needs a credit line to help cover €3.3 billion of debt maturing this year.

Car makers worldwide are battling falling sales as the credit crunch and worsening economic outlook hit cash-strapped consumers. Wachovia yesterday forecast "significant" falls in January sales for the struggling Big Three US manufacturers Ford, General Motors and Chrysler.