Automotive brakes maker Pacifica Group , controlled by Bosch , expects the crisis in the automotive industry to worsen in 2009, after a dreadful year in 2008.


“There is no prospect in the near term of any improvement in the highly challenging industry conditions that Pacifica is currently facing,” Pacifica said in its calendar 2008 annual report, according to news agency AAP.


“Our expectation is that the automotive crisis will deepen throughout 2009, with significant volume decreases forecast compared to 2008.”


The outlook for North America, Pacifica’s key market, was “particularly grim”.


“Automotive sales figures for February 2009 were the worst in 40 years, with car sales down 41% for the month,” Pacifica said. General Motors , Pacifica’s major customer in North America, recorded a 53% drop in sales and was seeking $US30 billion in federal aid.


“A significant restructuring of our operations in this market is likely in order to align production levels with expected demand,” the supplier said.


Pacifica said 2008 had been “one of the most difficult and challenging periods in Pacifica’s long history”.


In February, it reported a bottom-line net loss of A$242m for calendar 2008 and said it expected to report its third consecutive operating loss in 2009.


During 2008 the automotive market had rapidly deteriorated as a result of the global economic crisis, the prices of inputs such as steel had risen, petrol prices had soared almost 50% before easing back, and foreign exchange markets had experienced extreme volatility.


The company had also had to implement a major restructuring of its business following a review by Bosch early in 2008.


Production of vehicles fell significantly in the United States and Australia, and was lower than forecast in China.


Pacifica said it hoped that its operations in China would eventually help the company recover.


As a result of the Bosch review, Pacifica’s Chinese and US operations were now closely aligned with Bosch’s brakes division in their respective regions.


This had produced higher capacity utilisation of the foundry in China and closer co-operation between Bosch and Pacifica in the US.


“Pacifica has in recent years built a strong base in China and, subject to the speed and timing of the recovery in the Chinese economy, we are confident that our operations there will become a substantial value contributor within the group,” Pacifica executive chairman Peter Delhey said.


Pacifica said the future growth prospects of its operation in China was linked to improving utilisation levels of the foundry in Dalian.


This would depend upon the degree of success in increasing direct supply to the local vehicle makers and reducing the operation’s reliance on exports to the US.


Pacifica said the size of Australia’s car manufacturing industry would depend upon expanding exports of locally made cars and localising the manufacture of additional, smaller vehicles.


Ford has announced plans to make the Focus in the country and Holden plans to build the Cruze locally as well.


Delhey said although times were still challenging for the automotive industry, Pacifica could adjust its product portfolio and manufacturing footprint to changing consumer demand for more fuel-efficient vehicles, and emerge stronger and more competitive.