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Toyota losses mount
TOKYO/PARIS (Reuters) - Toyota, the world's top carmaker, said its losses were ballooning as world car sales drop, while truckmaker Volvo swung to a fourth-quarter loss and Italy readied aid for the ailing industry.
A sudden collapse in consumer demand last year battered automakers who were forced to cut production and shed jobs, leaving the sector and its related industries reeling.
Governments have swung into action, preparing aid packages to help out their struggling car sectors.
The Italian government on Friday approved a decree which included incentives worth more than 1,500 euros for trading-in cars which were more than 10 years old and buying a new one. The total value of the package for the car industry is worth between 1.2 billion euros ($1.5 billion) and 1.3 billion, a government source said.
South African car industry representatives said they had approached the government for loans to help curb job losses.
German's BMW, meanwhile, provided a rare glimmer of hope and its shares rose as it earned a clear profit in 2008 with fourth-quarter sales beating expectations.
Fellow German car manufacturer Volkswagen AG'S January vehicle sales plunged a fifth, according to a source close to Europe's biggest auto maker.
Daimler AG said sales of its luxury Mercedes-Benz brand vehicles fell 34.5 percent in January. Sales of the group's compact Smart car rose 3.1 percent year-on-year in the same period.
Toyota Motor Corp's operating loss for the year to end-March would be 450 billion yen ($5 billion), three times the loss it had forecast just six weeks ago. Its sales fell 34 percent last month in the United States, its biggest market.
"This is absolutely awful. The earnings situation has obviously deteriorated since last October when the company's stock price plunged," said Yoshinori Nagano, chief strategist at Daiwa Asset Management in Tokyo.
The Japanese firm has already let most temporary workers go and could cut full-time jobs in Britain and North America, a company source said.
Predicting further pain for the world auto industry, Moody's Investors cut its credit rating on Toyota for the first time in a decade.
In Europe, world-number two truck maker Volvo said it slipped to a surprise operating loss in the fourth quarter amid plunging demand and warned that key markets were likely to fall further this year. But shares rose on relief the company was still able to generate cash.
Elsewhere U.S. parts suppliers pressed for government aid and as President Barack Obama urged swift passage of a $900 billion stimulus package for the world's largest economy.
The auto supply industry employs more people directly than car manufacturers and is in talks with the U.S. Treasury to secure emergency funding to avoid a wave of bankruptcies.
ACCESS TO LOANS
Auto suppliers have requested some $25 billion in assistance, an amount that would double the U.S. government's commitment to the auto sector at a time when sales are at their lowest since the early 1980s.
"The key now is whether consumers in America will be able to start securing loans again," Daiwa's Nagano said. "Slumping sales due to the dismal state of the economy may be inevitable, but another big problem today is that consumers who can normally get loans can't get them."
Bob McKenna, president of the Motor & Equipment Manufacturers Association, warned that the parts industry has been shut off from credit at a time when orders from automakers are shrinking.
"Without immediate credit availability, an onslaught of supplier company bankruptcies is inevitable in the coming weeks and months, which would have a devastating, long-term effect on the U.S. economy," McKenna said in a statement.
GM itself is restructuring under a $13.4 billion government bailout, and along with Chrysler LLC is racing to meet a February 17 deadline to show U.S. officials they can be made viable after receiving massive public aid.
In South Korea, cash-strapped SUV maker Ssangyong Motor Co secured protection from creditors, but may struggle to revive in the near term or find new owners after it posted four loss-making quarters on plunging sales.
Difficulties with parts suppliers prompted Russian carmaker AvtoVAZ, which is 25 percent owned by Renault, to halt its assembly line indefinitely, Kommersant newspaper said, quoting AvtoVAZ's president.
(Additional reporting by Reuters bureaux worldwide; Writing by Kim Coghill and Helen Massy-Beresford; Editing by Ian Geoghegan and David Holmes)
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