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Business

Reports: BMW, Daimler to Idle Car Plants as Sales Crash

German luxury carmakers Daimler and BMW will temporarily close factories as a result of the current economic crisis, according to reports that surfaced over the weekend. And they're not the only ones.

BMW and Mercedes logos

They'll be adorning fewer cars this year

Daimler is to idle factories for five weeks because world sales of its Mercedes cars have slumped, a newspaper reported on Sunday, quoting a company spokesman.

The report came as Germany's other main premium car manufacturer, BMW, announced a four-day standstill at one of its car plants, in Leipzig, eastern Germany, amid signs that the world recession will be worse than so far feared.

The Frankfurter Allgemeine Sonntagszeitung said the Mercedes closure would begin in mid-December, but gave no precise date. It said stocktaking would take place on Dec. 12 and plants would not re-open before an annual holiday break at Christmas. Plants re-open on Jan. 12. Approached by DPA news agency, a spokesman declined comment.

Extraordinary times

Daimler CEO speaking at a podium

Zetsche thinks the worst is far from over

"The financial crisis is turning into an economic crisis," Daimler CEO chairman Dieter Zetsche told a telephone news conference, according to AFP news service. It provoked "in recent weeks a dramatic slump on our major markets."

"The situation is very challenging," Zetsche added, "we are living in extraordinary times."

Daimler said several days ago it was severely paring back its 2008 sales targets and saving where it could. Its third-quarter earnings of 648 million euros ($816 million) were sharply down from the 1.9 billion euros of one year earlier.

At the start of August, Daimler had spoken of cancelling shifts or complete days of output at its car plants in Germany and Tuscaloosa in the United States.

Angry dealers

BMW said the four-day halt at Leipzig, which makes 1 Series and 3 Series cars, would reduce its output by 2,800 cars. Monthly wages will be unchanged, but personnel will lose overtime credits from the past.

BMW's three brands, BMW, Mini and Rolls-Royce, suffered a 15-percent fall in sales in September in annual terms. US sales slumped one quarter, paring world sales to 121,000 vehicles for the month.

A man assembles a BMW at a plant

If BMW produces less, dealers want a reduction in stock they have to take

The German auto industry weekly Automobilwoche said German BMW dealers were demanding a 20-percent cut in their contractual allocation of BMW cars for the months from July to December this year.

In its issue to appear Monday, it said angry dealers walked out of a meeting with BMW after warning they could not afford to accept more cars into unsold stock.

General Motors' German arm, Opel, has also announced output cuts, as have Volkswagen's Spanish subsidiary Seat and Czech subsidiary Skoda.

An Opel plant at Bochum closed last Monday for two weeks, like General Motors Europe plants in the Belgian city of Antwerp and the British town of Ellesmere Port.

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