US carmakers will be beaten at home

European and Asian carmakers are expected to build more vehicles in North America than the Detroit Three in 2012 after a sweeping restructuring of the domestic industry.

General Motors, Ford and Chrysler LLC are expected to reduce assembly capacity in North America by more than four million units, or 35 per cent, to 7.5 million vehicles by 2012, according to a study by industry restructuring adviser Grant Thornton.

In the same period, all other carmakers combined - including Volkswagen, Toyota, and Hyundai - will increase capacity about 20 per cent to more than eight million units.

The Detroit-based carmakers are slashing production and closing plants to align with weaker demand.

Chrysler emerged from Chapter 11 bankruptcy proceedings this month by completing a sale to a group led by Italy's Fiat. GM filed for bankruptcyon June 1 and hopes to complete asale process to a new company ledby the US Treasury by the end of August.

"A new order is emerging where the Detroit companies may no longer be the volume leaders in their home market," said Grant Thornton chief Kimberly Rodriguez, co-leader of the firm's global automotive practice.

"Suppliers dependent on Detroit original equipment makers will have to present a new value equation to potential customers from Europe and Asia if they want to participate in the accelerated shift that is coming.

"The European and Asian carmakers will be looking for stable, proactive, long-term partners who offer good value.

"Domestic OEMs [original equipment managers] are seeking the same type of long-term partners and are working toward those goals, but the immediate expectations of the transplant companies are more challenging.

"North American suppliers have important strategic decisions to make, and the strategy must be defined and implemented quickly."

- AP