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November 14, 2008 (LPAC) -- A serious, additional blow has been delivered to the automobile industry in Europe, with the decision of three large European insurers to withdraw credit insurance to all GM and Ford suppliers. This will affect mostly European operations, as in the U.S. suppliers largely operate without insurance, as the {Financial Times} says. "The move leaves three possible scenarios: GM and Ford can start paying upfront for goods; they can hope their suppliers will trade uninsured; or they could be unable to buy the parts they need for car production". The three insurers are Euler Hermes, Atradius, and Coace, "which control more than 80% of the world's credit insurance market."

A considerable drop in automobile output is already expected because of the crisis symptoms that have hit the sector already before the insurers' decision. New car licenses collapsed throughout the EU by 14.5% in October, compared to September, which is a dramatic escalation of a trend that brought a drop by 5.4% for the January-September period, before. Car-makers' output will be reduced sharply, therefore, with the respective disastrous consequences on employment. In Germany, more auto plants will furloughed for "extended Christmas holidays" with workers staying home for several weeks, and Daimler is already mooting regular short-work schedules for the coming months (one or two weeks every month), beyond that. The implications for the steel industry, one of whose main clients is the car industry, and for the many supplier firms, are obvious.