Porsche To Slowdown Output In December And January

November 2, 2008 2:06 p.m. EST

Berlin, Germany (AHN) - Porsche Automobil Holding SE said Sunday that it plans to temporarily suspend its auto production towards the end of the year as it becomes another victim of global economic slowdown.

The luxury car maker made the decision to cut output in December and January after its rival Daimler AG (NYSE: DAI) took a break in its production on weakening financial condition.

The company's spokesperson said it plans to extend the Christmas holiday period for employees by three days and will keep its Zuffenhausen-based main plant closed Dec. 22 until Jan. 9, 2009.

Uncertain future of global slowdown has forced automakers across Europe to slash down production and layoff workers as they tackle with the fall in demand from North American region.

Porsche indicated Sunday that the slow production at its plant will give the company extra time to perform equipment upgrade work at the end of the year.

Other companies including Daimler AG, BMW AG and Volkswagen AG are considering to cut costs by temporarily shutting plants or change deliveries during the Christmas and New Year holidays.

Daimler AG is expected to temporarily halt its production from Dec. 11 to Jan. 12 at plants including the output of its flagship luxury Mercedes-Benz cars.

Last month, Porsche said in its preliminary sales data that it expects figure of 32,533 unit sales, which is a drop of 3.1 percent, in North America.

"Porsche has long been prepared for a possible economic crisis in the USA and has made substantial reductions in its warehouse stocks there," the company said in a statement.

Despite the general lack of buoyancy in the economic environment, the company's turnover increased by 1.3 percent to 7.46 billion euros for the fiscal business year ending July.

Last month, Porsche SE said it had options to purchase 31.5 percent of Volkswagen shares, in addition to the 42.6 percent of the Wolfsburg, Germany-based automaker already owns, pushing up its stake to 74.1 percent.

On Oct. 26, Porsche had confirmed that the intention to increase the Volkswagen stake to above 50 percent in November to December 2008 remains unchanged.

Based on German law, the company will require to own at least 75 percent in stakes to have voting rights at a shareholder meeting under a domination agreement. It will be then able to book Volkswagen's revenue, assets and profits on its own books.