Recession has German car makers reeling

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The Independent Online
THE devastating effects of the recession on Germany's car makers were highlighted yesterday as Daimler- Benz announced a 95 per cent plunge in profits and Volkswagen a massive DM1.3bn ( pounds 530m) group loss for the first quarter of 1993.

However, BMW confirmed that it had so far avoided the worst of the market collapse, although it did not provide details of earnings.

Daimler-Benz said group net profit fell to DM20m against DM480m in the same period last year. Group sales in the first three months dropped by 19 per cent to DM18.4bn.

Sales at Mercedes-Benz, which accounts for more than two-thirds of Daimler's group turnover, were down 24 per cent year-on-year to DM12.5bn in the first quarter. The only positive impulse came from the United States. Mercedes said that car production in the first three months had to be reduced by 39 per cent to 94,500 units to keep pace with vanishing demand.

Volkswagen's group loss of DM1.3bn for the first quarter compared with a DM202m net profit in the same period of 1992. Group sales fell nearly 8 per cent to DM19.6bn from DM21.2bn in the same period of the previous year. The company's interim report said: 'Only slight chances of recovery can be envisaged this year from the market side. It must still be expected that the recession will extend into next year'.

BMW cut production by 11.5 per cent in the first four months of this year compared with the same period in 1992. Turnover in the first four months at BMW was down 8.3 per cent year-on-year.

Eberhard von Kuenheim used his last speech as chief executive before the annual shareholders' meeting to warn that German companies would invest abroad if things did not get better. 'BMW cannot build only on the reputation of Made in Germany,' he said.

There was more bad news from Lufthansa, Germany's struggling state-owned airline, which said its heavy losses had continued into 1993, with little prospect of a return to profitability before 1994. It reported a 1992 group net loss of DM391m after a DM426m loss the previous year.

Retail sales in western Germany rose a real 1 per cent in March compared with the previous month. Over the first quarter of 1993 they were down, however, by a real 6 per cent compared with the same period in 1992, the Federal Statistics Office reported.