Tuesday June 2, 06:53 AM
Japan's Suzuki warns of loan loss to GM
TOKYO (AFP) - Suzuki Motor Corp. warned it could lose hundreds of millions of dollars in loans to failed General Motors (NYSE: GM - news) , but the Japanese firm expects the US giant would rise again.
GM, until recently the world's leading automaker, filed for bankruptcy on Monday in the United States after amassing mountains of debt over the past decade as it struggled to sell its products.
Suzuki (Munich: 603090 - news) , which makes small cars and motorcycles, said it has a total of 71.6 billion yen (745 million dollars) of credit, investment and debt guarantees to GM and affiliated companies.
Of the sum, 29.4 billion yen are loans and may become irrecoverable or see delayed repayment, the company said. It said it would allocate necessary loan loss reserves.
But Suzuki chairman and president Osamu Suzuki told reporters: "The most obvious reason (for the GM failure) is that they only made big cars and didn't make small cars."
"Since the reason is clear, their rehabilitation will likely come early," he said in a televised press conference in the central city of Hamamatsu.
The Japanese firm said despite the possible losses it had left unchanged its earnings outlooks for the business year started in April but added it would disclose an earnings revision promptly if necessary.
Suzuki expects to stay in black in the year ahead thanks to relatively robust demand in India.
It will continue its cooperation with GM on developing fuel cells and other environment technologies, the company said.
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