In the spring of 2008, Renault executives in France started receiving alerts from colleagues at Nissan North America about the health of the U.S. auto market. Auction prices for used cars were falling significantly. Orders were slowing, too. At the same time, cracks were starting to show in the U.S. subprime mortgage market, as securities lost value and adjustable-rate loans began to reset at higher interest.
Renault's leaders decided to take action. In mid-July, Carlos Ghosn, the CEO at the time, announced that 5,000 European positions would be cut, a total later raised to 6,000, mostly through attrition and severance. Inventory levels would be trimmed, and cash flow and production would be closely monitored. Subcontracting costs were lowered by 98 percent. Development of a sports car related to the Nissan 350Z was halted and several launches were postponed.
"The crisis started sooner for carmakers in the U.S.," said Patrick Pelata, who was named Renault's chief operating officer in mid-October 2008. "We looked to the U.S., and we said it was going to come to Europe."
That happened after giant U.S. investment bank Lehman Brothers filed for bankruptcy on Sept. 15, 2008, setting off a global financial crisis that later became known as the Great Recession.
The European auto market had begun to soften in 2008, and other companies took steps to counter the decline. Fiat Group -- that at the time included cars, heavy trucks, farm and construction equipment -- in July decided to extend summer vacation closings at manufacturing plants after noticing a global collapse in new orders in all its operating sectors, Ferrari supercars included.
"The second half of this year and the first half of the next could be a true bloodbath," Fiat and Ferrari Chairman Luca Cordero di Montezemolo told Automotive News Europe in July 2008. "By summer of 2009, we should have a clearer idea of the winners and the losers," he said.
Through government aid and incentives, the European auto industry was able to bounce back. It survived the "double dip" sovereign credit crisis in 2011-12 to post record sales and profits -- only to run up against an equally fearsome foe: The COVID-19 outbreak, which has temporarily shuttered factories and showrooms around the world in a cascade of bad news for automakers and suppliers.
Executives, analysts and consultants who witnessed the 2008 crisis say automakers and governments have learned lessons that will help them navigate the unknown impact of the coronavirus pandemic.
But back then, many companies were flying blind. "It was moving pretty fast," recalled Pelata, now a consultant and a board member of several prominent French companies.
"Starting in mid-October, the banks didn't want to loan us any money. Then we started to have cash management committee meetings every week, and we ran simulations on sales to see when we would be short on cash. Our simulations started showing that we would have cash problems in the summer of 2009, so we had nine to 10 months ahead of us," he said.
In the U.S., General Motors and Chrysler were teetering on the edge of bankruptcy, and Europe's automakers were facing their own liquidity issues as global equities markets plunged to lows not seen in five years or more.
Political and financial leaders shuttled between meetings and teleconferences in an effort to halt the bleeding. A hastily convened task force in the U.S. recommended that the government take control of GM and Chrysler, at a final cost of $80 billion.
"There was no other option for the government other than to take them to bankruptcy and to refinance the companies," said Xavier Mosquet, a senior partner at Boston Consulting Group in Detroit, who led a team of consultants advising the U.S. task force.