Tokyo - The head of the Renault-Nissan automaker group on Tuesday warned that the worst of the global financial crisis was yet to come, saying it could last into 2010.
Carlos Ghosn, the legendary manager who turned around Nissan a decade ago, said the auto industry was being pummelled by deteriorating markets in the rich world as well as a slowdown in emerging markets such as Russia and China.
"We have not seen yet the worst," Ghosn told a business forum in Tokyo.
"Even if the financial crisis stops, the consequences of the market slowdown in terms of unemployment (will) come. So far we have seen only the beginning of the consequences," he said.
Ghosn said he was bracing for "a relatively long term of credit turbulence."
"This is going to probably lead to a situation in 2009 which (will be) at best lukewarm. It may continue into 2010 if the financial meltdown does not find good solutions to address it," he said.
"I think we are in the unchartered water," he said.
Japan's Nissan, in which France's Renault holds a controlling stake, is cutting production of luxury cars for export to the United States and eliminating 1 680 jobs in Spain as part of its response to falling demand.
Renault is closing nearly all of its plants in France for at least one week and has cut its operating margin target for this year.
Focus on short-term goals
Ghosn said the recent sharp rise in the yen was hurting Nissan by making Japanese cars less competitive.
"I personally believe that if the yen remains at this level, all these workers in Japan will suffer because this is absolutely unrealistic compared to the level of competitiveness," he said.
In the time of severe crisis, Ghosn said, companies should focus on short-term goals - namely keeping their finances sound.
"Short-term issues have to be treated. That is very, very serious. Today, short-term is about managing cash," Ghosn said.
He added the financial crisis should encourage companies, not just automakers, to consolidate to protect themselves and to secure capital, as the banking industry has been doing.
"Situations like this favour consolidation," he said, citing the benefits of less competition and higher prices.
"I think this may happen in every single industry in this state of the world," he said.
Chrysler, one of the ailing US Big Three automakers, has been considering a merger into Nissan-Renault, according to industry and union officials in Detroit.
Businesses should regard the crisis as an opportunity to reform themselves to become flexible while pursuing long-term goals, Ghosn said.
"At the end of the day, I think that is what is going to make the difference between those who come out of this crisis stronger, more profitable, and those who would not make it or come out diminished," he said.
- Sapa