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German auto industry predicts grim 2009

(Agencies)
Updated: 2008-12-04 14:38

FRANKFURT, Germany -- The German auto industry's leading trade group said Wednesday it expects 2009 car sales to be the worst since the reunification of the country in 1990 as the global financial crisis takes its toll on consumers and economic growth.

Jeep workers listen to a number of industry and political officials speak during a Community Town Hall to highlight auto industry impact on "Everytown, USA" at the Toledo Supplier Park in Toledo, Ohio. US job losses accelerated in November while German car sales skidded to new lows, according to the latest batch of data Wednesday that added to worries about the global economic outlook. [Agencies]

The German Association of the Automotive Industry said it expects 2.9 million new car registrations in 2009, down from the 3.1 million registrations it anticipates in the current year.

"The automobile market has taken a downward tumble at a pace and magnitude that has never happened before," said Matthias Wissmann, president of the Frankfurt-based group that represents around 600 auto makers, suppliers and others in Germany.

Wissmann said the crisis has hit carmakers in all countries and that German producers, which include Volkswagen AG and BMW AG, among others, will have to adjust their capacity accordingly.

"This will also have an impact on the employees," he said. "The decrease in demand affects producers and suppliers alike."

According to Wissmann, the industry cut around 1,850 core personnel in September, compared with the month before. An additional 8,000 to 10,000 part-time positions have been shed in the last month.

Carmakers will try to avoid job cuts and layoffs and retain full-time workers by reducing overtime and the amount of hours they work, but Wissmann did not rule out further cutbacks.

At the end of the third quarter the German auto industry employed 761,600 people, 13,500 more than last year, thanks to an increase in hiring at the beginning of this year. Since then, automakers from Daimler AG to Porsche SE have reported slowing sales and demand.

Adam Opel GmbH, the General Motors unit, has euro1 billion ($1.26 billion) in state guarantees for loans from the German government that would reduce its borrowing costs.

The association has also adjusted its forecasts for this year. Carmakers had hoped for over 3.2 million new car registrations but now expect 3.1 million. In exports, a key area for the German auto industry, results will likely fall to between 4.1 and 4.2 million vehicles from 4.3 million in 2007.

"The global market for vehicles paints a dramatic picture," said Wissmann. "While inland automobile production increased by 2 percent in the first half of 2008, we have to reckon with a reduction of 9 percent in the second half of the year. For the entire year of 2008, we expect a production volume of about 5.5 million vehicles, compared with 5.7 million in 2007."

Orders have been declining since July and sales in the overall industry are expected to stagnate around euro290 billion for 2008. Even the producers of commercial vehicles have been hit by the crisis, following five years of record sales.

Wissmann refused to predict next year's results more exactly.

"We debated putting out a prognosis for 2009 at all, as many companies are not. What will happen to China and Russia in 2009? We don't know what the new or old American government will do with the Big Three," he said, referring to the bailout being pursued in Washington by GM., Chrysler LLC and Ford Motor Co.

Wissmann emphasized that the company will try to hold on to its core personnel.

"We will need them when the crisis is over," he said, adding that rivals abroad, including Fiat SpA, Toyota Corp. and American automakers are seeing similar, if not worse, suffering.