There was more doom and gloom from the automotive industry yesterday as BMW admitted a sharp fall in profits and Jaguar announced plans to extend its voluntary redundancy scheme to up to 600 staff.
The German luxury car manufacturer blamed weakening global economies and falling consumer spending for third-quarter profits down by 63 per cent to €298m (£241m) on sales down by 4.2 per cent. The group is to cut production by some 40,000 units this year and will no longer beat last year's sales volumes.
"The performance of the BMW Group in the third quarter 2008 was perceptibly influenced by the economic downswing in the wake of the financial crisis," the company said. "Due to the prevailing adverse climate and the uncertainties caused by the financial crisis, the profitability targets set for 2008 are no longer achievable."
The company is predicting worse to come in 2009 in its three biggest traditional markets of Japan, the US and western Europe. The US will see double-digit contractions, Europe will continue to be badly affected by concerns over CO2 emissions on top of consumer spending issues, and only Japan can hope for stagnation. "There are currently no indications that any of these individual markets will recover; at best, some of them might stagnate at a low level," BMW said.
Although growth rates in the emerging economies remain high, even there sales are likely to be trimmed back.
Meanwhile, in the UK, Jaguar Land Rover is extending its voluntary redundancy scheme after last month's request for 198 volunteers was heavily over-subscribed. The scheme is being extended by up to 400, the company said. The offer, made following consultation with trade unions, is of a lump-sum payment of nine months' pay.
David Smith, chief executive of Jaguar Land Rover, said: "While regrettable, these are necessary actions to manage our business through a very challenging period."
Last month, the company responded to falling production levels by offering staff three months' leave in exchange for a 20 per cent pay cut.
The last month has seen a swath of bad news from across the global car industry. From the US, General Motors reported October sales down by nearly half from last year, while Porsche's US figures for the month came in at 39 per cent down. In the UK, GKN, the parts manufacturer, is axing 1,400 jobs worldwide and cutting full-year profit predictions to some 20 per cent lower than 2007. And Nissan is stopping production of the Micra at its flagship Sunderland factory for several weeks.
Peugeot Citroë*saw sales slump by 5.2 per cent in its third quarter, and is predicting a 17 per cent contraction of the total European car market. In Japan, Nissan reported overall profits down by 39 per cent last quarter, while Suzuki and Fuji Heavy Industries, which makes Subaru cars, have also reported sluggish profits.