Berlin/Seoul - Vehicle makers around the world signalled fresh production cuts and job losses as demand continues to slump while Germany unveiled a 1.5 billion euros aid package for its own auto industry on Tuesday.
World number two truckmaker Volvo said it had handed redundancy notices to a further 1 620 workers following a fall in orders. Late last year Volvo said it would cut more than 2 000 jobs in its European truck business and 1 350 in its construction equipment business.
Industry analysts J.D. Power predicted a worldwide fall in auto sales of 8.2% in 2009. J.D. Power and Associates president Finbarr O'Neill, speaking at the Society of Automotive Analysts outlook conference at the Detroit auto show, forecast a 12.3% decline in North American sales this year and a 14.9% drop in Europe.
The German government said its 1.5 billion worth of auto industry aid forms part of a 50 billion euro stimulus package of investments, tax relief and support for companies. The measures include incentives worth 2 500 euros for new car purchases.
The announcement by Angela Merkel's coalition government will be crucial for the German Chancellor who is seeking re-election in September. It came a day after Daimler announced plans to put about 20% of its staff on a four-day week in response to falling sales.
Volvo spokesman Stefan Karlsson said its decision to cut jobs reflected market reality: "It boils down to weak order intake and we have customers that in the present environment don't dare place orders due to the uncertainty. And we have no signs of improvement."
The group makes heavy-duty trucks under the Renault, Mack, Nissan Diesel and Eicher brands as well as its own name.
South Korean sport utility vehicle maker Ssangyong Motor Co has halted production at both its plants, putting local parts makers at risk and dealing a fresh blow to Asia's fourth-largest, but slowing, economy.
Ssangyong said it had not decided when it would resume production. Its rivals Kia Motors Corp, South Korea's second-biggest carmaker, said it would cut output by a quarter in January-March, days after market leader Hyundai Motor Co said it planned to cut domestic production by 25-30 percent in the face of slumping demand.
An analyst said the move would hurt local car parts makers: "I wonder if Ssangyong has enough money to operate factories, and who will inject money as the global auto industry has been suffering?" said Yang Hee-joon, autos analyst at Mirae Asset Securities.
"That will be a hard hit to domestic parts makers, and some, which rely heavily on Ssangyong, will go bankrupt."
Peugeot sales slow down
In Paris, France's largest carmaker PSA Peugeot Citroen reported an 8.7% fall in full-year vehicle sales. The group sold 2.952 million vehicles in 2008, compared with 3.234 million in 2007.
Jean-Philippe Collin, head of Peugeot's car division, predicted that 2009 would be "just as difficult as 2008".
BMW, the world's largest premium car maker, provided a glimmer of light, announcing a 28% surge in car sales in mainland China to 65 822 units in 2008, though that was still down on the 42% increase in 2007.
Car sales growth in China, the world's second-largest auto market, slowed to a single-digit percentage last year for the first time in at least 10 years as consumer confidence was dented by a slowing economy.
Waning demand, which threatens the survival of several carmakers, has damaged sentiment at the Detroit auto show, the industry's biggest event, which opened on Sunday.
While most automakers expect sales to decline further in 2009, some are publicly putting a brave face on it.
Not so the dealers: "I have seen a better mood at funerals," said Mike Jackson, president of AutoNation, the largest US car dealer group.