German Auto Industry Warns Of Bankruptcies, Job Losses Unless Government Steps In Immediately

October 29, 2008 8:46 a.m. EST

Berlin, Germany (AHN) - German car manufacturing firms and allied industries are waiting for the federal assistance to the sector in the form of tax incentives and a bailout package. The halt is starting to be felt across the nation. Unless the government aid arrives soon, the industry warned of bankruptcies and major job losses in the coming months.

Ferdinand Dudenhoeffer, director of the Center of Automotive Research, said if the much-awaited federal assistance will be delayed substantially, up to 20 percent of auto suppliers may become bankrupt within the next two years, while 50,000 will become jobless.

Germany Economy Minister Michael Glos announced on Tuesday a tax incentive program which would encourage Germans to buy new vehicles to boost the industry, which is threatening to shut down plants and lay off employees unless sales substantially pick up.

Among the German vehicle and parts companies which have made such threats were Daimler, BMW, Bosch and Continental. Bosch will cease operations at a key plant and make 400 workers rest for the meantime, while Continental plans a break beginning Christmas, which would translate into a bleak new year for its 1,500 workers from Continental's Regensburg facility.

Similar problems have been aired by other car manufacturers in Europe. French auto firms Peugeot Citroen and Renault announced last week major production cuts, while Italian car maker Fiat forecast a 20 percent drop in sales for 2009.

As a result of their disclosures, Peugeot Citroen's shares fell 5.9 percent to $21.57 (16.84 euro), Renault tumbled down by 15 percent to $27.71 (21.63 euro) and Fiat plummeted by 8.7 percent to $7.48 (5.84 euro).