What's Important in the Financial World (11/6/2012)
Nov 6th 2012 6:36AM
Updated Nov 6th 2012 8:50AM
American Suzuki will leave the U.S. market, a victim of small sales and a brand that U.S. car buyers barely know. 24/7 Wall St. recently predicted that Suzuki would not make it here. The parent company announced American Suzuki Motor Corp. had filed for Chapter 11:
When considering its long-term business plan, ASMC recognized that it will be unable to maintain profitability with respect to its automobile marketing business, taking into account various factors such as economic conditions including the currency exchange rate, market trends, the models of Suzuki automobiles sold in the U.S. which are primarily small cars
Suzuki sold fewer than 22,000 cars in the American market through the first 10 months of the year. That left it with a share of only o.2%. The news might make other companies that have tiny sales in the United States to reconsider their presences. That list certainly would include Volvo and Mitsubishi Motors.
Greece's Screeching Halt
The Greeks continued to prove that they can be their own worst enemies. Constant strikes there take businesses offline and almost certainly hurt the flow of tourism critical to the economy. The Greek parliament will vote on extreme austerity measures this week, which its leadership seeks in exchange for desperately needed financial aid. The strikes also serve as a reminder to the European Union and International Monetary Fund that a fickle electorate may throw out current leaders for ones who might repudiate austerity budgets, and once again Greece will be thrown into turmoil. That, in turn, makes it more likely that Greece could leave the alliance completely and default on what is left of its sovereign obligations. CNN reports:
The nation of Greece comes to a screeching halt again for two days starting Tuesday. Unions have called for a 48-hour general strike ahead of an anticipated vote by the Greek government on yet another round of austerity measures late Wednesday night. Protesters will march on the parliament in central Athens on both days.
Nissan in China
Nissan became the latest Japanese company to say that a territorial dispute between its nation and China will badly hurt earnings. At some point, the Japanese government must decide whether ownership of a few small islands is worth the damage to many of its largest corporations. Nissan reported, similarly to Toyota Motor Corp. (NYSE: TM) and Honda Motor Co. Ltd. (NYSE: HMC):
[I]n the first half it had an operating profit of 287 billion yen, or $3.61 billion, down 7.3% from the same period last year.
Chief Operating Officer Toshiyuki Shiga said the latest figures were positive, considering the challenging period for the company.
"Nissan has delivered solid results in the first half despite the continued appreciation of the yen, volatility of the macro-economy and particularly difficult conditions in Europe," said Shiga. "The operating margin was still respectable at 6.3%."
Japan's No. 2 carmaker by sales revised down its operating profit forecast for the full year 18%, factoring in impact of the yen and Europe, as well as a disruption of sales in China.
Demand has slumped in the world's biggest auto market as Chinese consumers shunned Japanese cars amid a territorial row over the Senkaku, or Diaoyu, Islands.
Douglas A. McIntyre
Filed under: 24/7 Wall St. Wire, Market Open Tagged: featured, HMC, TM