Milan - A warning of unprecedented staff cuts at Toyota, the world's biggest auto maker, and word of a possible first quarter loss by Volkswagen piled fresh pressure on struggling car manufacturers on Friday.
The bleak news came after a halt in dividend payments on Thursday by Italy's Fiat SpA, the first European car maker to report 2008 results, as it headed into what it called one of its worst years.
As the global auto sector reeled from economic recession, plunging demand and production cuts, UBS analysts said they expected France's PSA Peugeot Citroen and Renault to suspend dividends as well.
European commercial vehicle makers also shared the pain of economic downturn with industry data on Friday showing a 24.4% year-on-year drop in the market for December.
Toyota is considering cutting full-time employees in Britain and North America, a company source familiar with the matter told Reuters.
Despite its efforts to limit the damage of the crisis with production cuts at its factories, Toyota still faces its first operating loss in history for the year to March.
In Europe, although Volkswagen's 2008 results are expected to be higher than the prior year, its chief financial officer could not rule out running a loss in the first quarter of 2009.
Hans Dieter Poetsch said the global car market could shrink 15% this year, echoing a warning given by chief executive Martin Winterkorn recently of "critical times ahead."
The US government has pledged billions of dollars to support its auto sector and European governments are working on plans to help crisis-hit car makers.
Others had differing views on state aid, however.
Despite its problems, British luxury car maker Jaguar Land Rover said it did not want the government to bail it out.
Speaking to Sky News, David Smith, chief executive of Jaguar Land Rover, a unit of India's Tata Motors, said he wanted credit to start flowing again, either from direct lending or state-backed loans.
And a US Democratic senator urged President Barack Obama to require Chrysler LLC to repay the billions of dollars in loans it received from the government if Fiat should take a controlling stake in it.
Fiat announced a partnership with Chrysler on Tuesday in a move that is likely to push other car makers to seek more alliances to cut costs in the face of plunging sales in the worst crisis to hit the industry in decades.
One small, bright spot came out of China, where FAW Car Co, a unit of one of China's largest auto makers, posted a 90-120% net profit rise for 2009.