Job cuts in the German auto industry may become inevitable this year if the steep slump in global demand for new trucks and cars continues at the current pace, auto association VDA said on Friday.
Go deeper with GlobalData
“For 2009, the industry is expecting a global decline in car sales of at least 16%, that is to say, 8 million cars less than 2008. Previous growth markets, such as the new E.U. countries and Russia, will drop by approximately 30% in 2009,” VDA said, in a document published on its website, according to Dow Jones.
The auto industry and related suppliers is one the biggest employers in Germany, Europe’s largest economy.
“The possibility cannot be excluded that employment in the German automotive industry may have to be reduced in 2009. Depending on the extent of the production cuts in the factories, all groups of manufacturers will have no other alternative but to reduce jobs,” VDA said.
Several companies have started to reduce their headcount in recent months through voluntary termination agreements, but so far have avoided large-scale layoffs, the news agency noted.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataDomestic demand in Germany, however, has been boosted by a government-backed scrapping incentive scheme to trade in old fuel-hungry cars for new, more efficient vehicles.
The German car market “will rise quickly during 2009 and will easily manage to exceed the levels of 2007 and 2008,” VDA said. German car sales totaled around 3.1m units in 2008.
But VDA noted that “there is still a range of major risks affecting the domestic market as well, such as the uncertain development of employment amid the economic downturn. “This is exerting a good deal of pressure on the willingness of people to make major purchases,” VDA said.
It said that the major economic stimulus programs around the globe “must take effect quickly and help to stabilise the markets.”
VDA said the trend toward small and fuel-efficient vehicles on the German market will continue, Dow Jones added.
