Plummeting Car Sales In Europe Prompts German Carmakers To Send SOS To Federal Government

October 23, 2008 12:34 p.m. EST

Berlin, Germany (AHN) - Plummeting automobile sales in Europe has led the German car manufacturing industry to seek federal help.

On Thursday, Daimler, the world's second largest makers of luxury vehicles, reduced its 2008 earnings forecast by $1.3 billion (1 billion euro) after its third quarter income decreased on weak sales. Other German car makers have reported similar weak figures. Mercedes-Benz cars division disclosed its unit sales declined 6 percent.

To arrest a further downturn of the industry, its leaders sought financial assistance from the federal government. State support will counter the uncertainty of car buyers, worsened by the financial crisis, and help strengthen consumers' confidence, said Eckehart Rotter, spokesman of the German Automobile Association.

While the German government is not inclined to come up with a national bailout package, it is open to helping specific industries in need of a helping hand. Federal spokesman Thomas Steg explained, "The chancellor spoke out specifically against a vague, traditional, wide-ranging credit and economic program financed by new borrowing... What could be helpful in this situation are very precise, very targeted measures to stimulate investment for certain industries."

The industry-specific assistance will be included in the 2009 federal budget, which will be finalized in November, Steg said.

He added the automobile industry will likely get high priority because of its contribution to creating employment. Among the assistance the government is considering for the industry are tax breaks for the production of clean cars and state guarantees on loans of small- and medium-sized car production firms.