US automakers to continue to face challenges in 2006: S&P

Washington (Platts)--21Dec2005

Prospects for US automotive makers General Motors Corp and Ford Motor Co
will continue to be challenging in 2006, according to a Standard & Poor's
report published Wednesday.

     In its assessment of the near-term outlook in the auto market, S&P found
that "market share for these two companies has eroded significantly, and sales
of their most profitable products have plummeted." Both companies continue to
lose market share to Japanese and Korean manufacturers. Because of weakening
sales, both GM and Ford could again begin using heavy incentives to entice
buyers.

     In addition, S&P believes the two US automakers, which are being
challenged both operationally and financially, will encounter difficulty in
the coming year as high gas prices, rising interest rates, uncertain consumer
confidence, and lengthening auto loan terms dampen demand.

     "At the same time, we expect the European auto market to remain flat in
2006 or show 1% improvement at best," said S&P. "Consumer spending remains
tepid in Germany, although sales may increase there next year, as consumers
rush to buy before a planned increase in the value-added tax in 2007. We
expect the sales trend to continue declining, though, in the UK and Italy."

     For more information, take a trial to Platts Metals Week at
http://plattsmetals.platts.com.

Please visit: www.platts.com

Their coverage of energy matters is extensive!!.