Car industry gets early Christmas present, shares slide again: economy Roundup

Australia’s beleaguered car industry has received an early Christmas present, with GM Holden announcing it will build a four cylinder small car at its Adelaide plant from 2010.

Australia’s beleaguered car industry has received an early Christmas present, with GM Holden announcing it will build a four cylinder small car at its Adelaide plant from 2010.

The move will help Holden diversify its manufacturing base away from its flagship Commodore model, sales of which have been falling for more than five years.

Holden claims the car will help the company play a leading role in the development of alternative fuels and fuel saving technologies.

“It redefines our future,” Holden’s managing director Mark Reuss sais yesterday.

Once again, taxpayers have kicked in cash to make sure the project gets off the ground. Holden will receive $149 million over three years from the Federal Government and $30 million from the South Australian government.

Despite the announcement, the automotive industry is bracing for a difficult 2009. It was revealed today that the stockpile of unsold cars on Australian wharves has now topped 100,000.

Shares down

The Australian share market has lost ground again today, with the benchmark S&P/ASX200 index falling 12.1 points or 0.34% to 3,545.3 at 12.05 AEDT.

But despite the disappointing start to the day, the Aussie dollar has gained ground to $US68.5 cents.

Wall Street suffered losses overnight, on more evidence the country’s recession is affecting corporate profits. The Dow Jones industrial average fell 59.42 points, or 0.69%, to 8,519.69.

Oil prices slipped below $US40 a barrel again, closing at $39.91.

Corporate news

Bendigo and Adelaide Bank says it has raised $80 million through a share purchase plan and has announced a further placement to institutional investors.

Bendigo had offered each of its shareholders up to $7,000 in new shares at $10, and will now offer additional shares at the same offer price to institutional and sophistical investors.

“Bendigo is always exploring opportunities to grow and expand, including alliances and acquisitions that provide a strategic fit and offer improved and lasting returns for shareholders,” the bank said in a statement.

Meanwhile, Harvey Norman has recorded an 8.7% increase in like-for-like sales for the 28 days to 21 December. The group also says sales for the month to last week increased 4.5% compared to the same period last year.

“Retail margins continue to be under pressure,” the company says.

Meanwhile, Philip Lowe has been tipped as the favourite to become the next governor of the Reserve Bank of Australia. Lowe will become Assistant Governor (Economic), the position previously occupied by current governor Glenn Stevens before he became deputy governor.

Lowe assumes the role from Malcolm Edey, who has held the position for the last seven years.