German Car Sales Take Off Despite Economic Insecurity | Business| Economy and finance news from a German perspective | DW | 08.03.2008
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German Car Sales Take Off Despite Economic Insecurity

German carmakers are enjoying a great start to the year as sales skyrocket. Some are even doing well on the US market, where a recession is looming.

Mercedes emblems

Mercedes needed nearly 100,000 of these last month as sales boom

Total sales in Germany's auto sector rose by 17 percent in the first two months of this year, according to Germany's national car industry association, VDA. The jump trailed a year of slow sales due to a 19-percent value-added tax hike in January 2007.

"That is the best start to a new year since 2003," said VDA president Matthias Wissman.

Daimler this week said its luxury flagship brand Mercedes-Benz sold 96,600 cars world-wide last month, representing a 17.7 percent increase over last year, largely due to the popularity of its C-class.

Only Mercedes gains in the US

Sales of is Smart fortwo brand also did well, doubling overall to 8,800 sold. 1,800 of the economy vehicles were purchased in the US, where buying power is slipping and the economy is said to be nearing a recession. The euro hit an all-time high of 1.52 against the dollar last month.

Most of Daimlers' US sales fell into the luxury category, however, where buyers are less affected by market swings. Mercedes-Benz posted a three percent rise in the US, the only German carmaker to post figures in the black on the other side of the Atlantic.

BMW factory

BMW's restructuring plans are likely to lead to massive job cuts

During the Auto Salon car show in Geneva, Mercedes-Benz announced it is planning to release a lithium-ion hybrid version of its S-class luxury car in 2009. Though the sedan would emit 190 grams of carbon dioxide per kilometer, much more than many smaller vehicles, it claims to be the most efficient luxury car in the world.

BMW ponders new partnership

Munich-based BMW also announced a 14 percent rise in sales so far this year.

BMW chief Norbert Reithofer sparked speculation this week in Geneva by saying that promising discussions had been held with a potential new partner, which he declined to name. General Motors and Fiat are considered likely candidates, as BMW already excluded a partnership with Audi and talks with Mercedes have been thorny.

Creating partnerships is part of the Munich carmaker's restructuring plan. Its subsidiary Mini has collaborated with Citroen since December 2004 in building motors for smaller models. The plan also includes cutting 8,100 jobs world-wide, 2,500 in Germany, in an effort to save six billion euros (over $9 billion) by 2012.

Porsche 911

With an annual output of 100,000 cars, Porsche is significantly smaller than VW

Despite a two-percent setback on the US market, Reithofer said his firm continues to do good business in the US.

"BMW will be profitable in the US in 2008," he said. "We're not just talking about a few hundred million euros."

Porsche to buy majority share of VW

Audi also has ambitious plans to pick up sales in the US, despite a 6.9 percent drop there in February. It has said it wants to increase US sales from 93,000 to 200,000 by the year 2015 and is considering setting up a production plant there.

German luxury sportscar maker Porsche reported an impressive 44-percent increase in first half earnings, in part due to the success of Volkswagen, where it has had a one-third share. Earlier this week, the company unveiled plans to raise its share in the Wolfsburg brand to over 50 percent, creating what Porsche CEO Wendelin Wiedeking called a "collegial partnership" and not a takeover.

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