Auto production in North America could slide by a third on an annual basis in 2009, according to a new report released during May.

Financial analysis company Global Insight conducted a study which found that output will fall to 8.4 million over the course of the year, the Wall Street Journal reports.

The news comes after the firm decided to cut 150,000 vehicles from its late-April prediction in light of expected production cuts over the summer by General Motors (GM) and Chrysler.

However, the report also suggested that these losses will be partially offset by an improvement in domestic output from non-American automakers such as Toyota and Honda.

Ford - which has not yet applied for federal financial aid - has increased its early-2009 North American production forecast by 220,000, while Toyota and Honda plan to raise output by 43,000 and 80,000 respectively.

"We think that most of any lost sales will be picked up almost immediately by the rest of the industry, with Ford the biggest winner from the fallout," said Global Insight in a statement quoted by the news provider.

The company arrived at its latest forecast after taking into account Chrysler's recent decision to idle work at all its US factories for 60 days and GM's plans to cut costs throughout its various brands.

GM announced in April that Pontiac would be added to Hummer, Saab and Saturn on its list of brands facing sale of closure, while it has now agreed to sell off its GM Europe division.

The study also suggests that production across the industry will fall by 48 per cent on a year-on-year basis in the second quarter to 1.8 million cars and trucks, while third-quarter output will slump by 22 per cent to 2.3 million.

According to the company, the declining trends will not be easily reversed, with 2010 production dropping by 263,000 vehicles to 10.4 million - a higher estimate than it outlined a month ago.

Moving into 2011, Global Insight believes that overall output will slide by an additional 319,000 to 12.3 million.

US Auto Output Expected To Fall By A Third In '09 -Report (13/05/09)

GM has now seen a plan to exchange its debt with bondholders for as much as a 25 per cent stake in the restructured company approved.

Looking to complete its restructuring proposals ahead of the government's 1st June deadline, the automaker offered the plan to bondholders with just over 50 per cent of its $27.2 billion bond debt.

The majority agreed, meaning bondholders will have access to a ten per cent stake in the new firm, with warrants for an extra 15 per cent.

Under the terms of the deal - which should guarantee GM bankruptcy protection - the United Automobile Workers' (UAM) union will also receive a 17.5 per cent stake, plus an option for a further 2.5 per cent.

However, the New York Times suggests that the deal will not prevent GM from being declared bankrupt and becoming 70 per cent-owned by the federal government.



Meanwhile, Chrysler will be selling its assets to a group fronted by Italian company Fiat SpA for about $2 billion after an American bankruptcy judge approved the proposals.

Judge Arthur Gonzalez confirmed that the automaker's assets will be transferred to a new firm featuring 68 per cent joint control by a healthcare trust and the UAW.

Fiat will control 20 per cent, while the remaining 12 per cent will be taken up by both the Canadian and US governments.

"Indeed, because of the overriding concern of the US and Canadian governments to protect the public interest, the terms of the Fiat transaction present an opportunity that the marketplace alone could not offer, and that certainly exceeds the liquidation value," wrote the judge.

Chrysler filed for bankruptcy on 30th April and 90 per cent of its senior lenders support the deal to create the new company, which will be known as Chrysler Group LLC.



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