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German car makers plan for further jobs losses

FRANKFURT - The German car industry, which employed 788,000 people in mid-1991, will have fewer than 600,000 jobs in the medium term, the VDA motor industry association said yesterday, writes John Eisenhammer.

'Only in this way will we be successful in regaining a competitive advantage over foreign rivals,' Erika Emmerich, the VDA president, said.

Amid dismal sales and output figures, the association said it saw the first faint hints that the worst was over for its members. While domestic new orders continued to stagnate, there was a weak pick-up in export demand. The VDA said it hoped output would rise next year by as much as 5-6 per cent from 1993. But recovery would be slow and risked being hampered by the government's planned fuel tax increase at the beginning of 1994.

In the first seven months of this year, car production was 26 per cent down on the same period last year, and the VDA forecast that domestic car sales in 1993 would drop to 3 million units from last year's 3.9 million.

The association drew attention to what it called the silent exodus of production from Germany. Under massive cost pressures, 65 per cent of all component suppliers are planning to shift some production abroad.

'Drastic action is needed to save this vital sector of German manufacturing industry,' it said.

Mercedes-Benz and BMW have announced plans to start production in the US, while Volkswagen intends to expand into China.