MercoPress. South Atlantic News Agency

German auto industry heading for worst year since 1990

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.

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, BMW, Daimler, 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 one billon Euros 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% in the first half of 2008, we have to reckon with a reduction of 9% 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 290 billion Euros for 2008. Even the producers of commercial vehicles have been hit by the crisis, following five years of record sales. (AP)