Green technologies to drive the motor industry

Signs of a new dawn as innovative measures and new technology look set to revolutionize a struggling motor industry

The outlook for 2009 may seem bleak, but investors need look no further than the car industry for a positive lift.

A revolution is occuring.

There was more good news for the FTSE 100 on Thursday. It stayed in positive territory for most of the day, finally ending 73.41 points ahead at 4226.10.

Housebuilders too were rallied by signs that the drop in house prices may be slowing.

Barratt Developments rose 5p to 50p and Persimmon climbed 12.5p to 459.25p, while Taylor Wimpey jumped 4.22p to 10p.

Some retailers looked shakey (Kingfisher fell 2.9p to 116.6p, Currys owner DSG International lost 1.5p to 12.5p), but others contiue to show theirs is some value out there, no more so than Alba, climbing 14.5p to 49p as it sold its Alba and Bush brands to Home Retail Group's Argos division for £15.25m.

So what of the motor industry?

For manufacturers these are hard times, but innovation and a green revolution could spell the beginning of a bright clean future. Green technologies are providing pragmatic solutions to profits in 2009 and it is Detroit rather than Scandinavia that is leading the way.

Survival demands it.

The motor industry is facing its greatest challenge since the 1973 oil crisis. America’s big three car manufacturers - General Motors, Ford and Chrysler – have asked for a $25bn (£16bn) bail out.

European manaufacturers have called on the EU for help too - a €40bn (£34bn) bail-out to safeguard thousands of staff.

Expect the Detroit manufacturers to submit another request next week for a $25bn bridging loan from the US asset relief programme.

Analysts predict sales in the US will fall 17 percent to 13.4m units this year, with next year’s sales figures expected to fall to 11m.

EU factories are reducing production as the profitable van markets is hit.

New van sales fell 18.3 percent in Europe last month, according to the latest figures from the industry lobby group ACEA.

Sales in western Europe were down almost 20 percent to 144,516, and in Britain and Spain, they fell by 35.5 percent and 52 percent respectively.

Those who have looked to Eastern Europe and Russia to help the industry have been disappointed.

As French, German, Italian and Spanish plants are expected to remain closed for extended festive holidays that could last up to a month into the New Year, Polish, Czech sites are looking to follow.

And Polish sales of new lorries dropped 43.2 percent in October and eastern Europe is down 11 percent this year.

New car sales are also weak, falling 14.5 percent last month in Europe as a whole, and 55 per cent and 40 percent in Ireland and Spain respectively.

Despite the gloom, the smart money may still look towards America.

The ‘green’ agenda being backed by Barack Obama is doing little right now to ease the plight of the Detroit Three in decline, but watch things change in 2009.

American carmakers are expected to introduce more green models in 2009 as industry sources predict prospective buyers will switch from gas-guzzling luxury vehicles to more fuel-efficient, smaller models.

Even BMW reports customers opting for its 3 Series or for smaller engines in its 5 and 7 Series range.

Daimler's fuel-efficient two-door Smart car, which is now available in the US, has seen sales jump 47 percent this year to 113,2000 and last month the rise was 7 percent.

For many eco-friendly drivers in America and Europe the problem is that these green alternatives are still too costly.

Watch budget models begin to hit the showrooms from the middle of next year, as prices fall and sales begin to recover.