In a separate statement, Edzard Reuter, chairman of Daimler Benz, echoed the Queen by describing 1992 as an annus horribilis, although 'at least Daimler had avoided having its house burnt down or its family split up'. He said group net profits would be significantly below last year's.
'The economy just burst like a bubble. We are facing some tough realities,' Mr Reuter said.
Ford Germany also said it exected to post a 'clear loss' for 1992, after the board had predicted a favourable result a few months ago.
The abruptness of the collapse in consumer and investor confidence, and how it caught business unawares, were the central themes of what Mr Reuter described as a sobering review of Daimler's year. He still hoped for recovery in the latter half of 1993.
VW's head of finance, Dieter Ullsperger, said he expected the German car market to decline by 20 per cent next year and the western European market by 10 per cent. Because of the fall-off in sales in the current quarter and the dramatic effects of the adverse currency movements within the European exchange rate mechanism, net profits for 1992 would be 'considerably below last year', he said. The company's share price fell nearly 4 per cent to around DM235, its lowest level in four years.
Mr Ullsperger said 1993 would be a 'difficult year', confirming that VW had planned short-time work at all seven of its German plants for the first quarter of next year. This will cut annual car production by some 80,000 vehicles. VW also said it was cutting back expansion plans for its new Mosel plant in eastern Germany to less than half the 250,000 vehicles originally intended.
Mercedes, which accounts for two-thirds of Daimler's sales, has also responded to the downturn with short-time working and lay- offs, as well as what Mr Reuter called a 'severe streamlining of management across the group'. Daimler will be particularly hard hit by plummeting car sales because it relies on a strong automobile division to carry weaker units such as AEG and DASA.
Joachim Bernsdorff of Bank Julius Bar said he expected first quarter results, particularly from Mercedes and VW, to be 'diabolical'.Reuse content