VW Halts Production As Car Crisis Deepens | Business| Economy and finance news from a German perspective | DW | 23.02.2009
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VW Halts Production As Car Crisis Deepens

Europe's biggest carmaker has introduced short-time work for the first time in 25 years. Some 61,000 VW workers in five different plants have been given an enforced five-day break in response to poor sales forecasts.

vw logo on building

Things will be quiet at vw for the next five days

The step comes as the global financial crisis continues to hit the entire car sector hard.

With sales expected to drop by around 10 percent in 2009, VW has put around two-thirds of its employees on short-time to avoid over-production.

The company said that its research and development department and parts of its components manufacturing section would remain unaffected by the measure that starts on Monday, Feb. 23.

The VW works council agreed to the step. "It is necessary to react to the different market circumstances," it said in a statement.

Volkswagen joins other German carmakers

collection of BMW logos

BMW has also had things better

The VW subsidiary Audi also introduced short-time work at its Györ factory in Hungary on Monday. Production had already been halted at the site between mid December and mid January.

Other German car manufacturers, such as BMW and Daimler, have already brought in short-time work.

Meanwhile, the future of Germany's Opel remains uncertain. An Opel spokesman said in German radio on Sunday that the company would present a plan in the next few days intended to overhaul the business and stave off imminent collapse.

Chancellor Angela Merkel and the country's new Economics Minister Karl-Theoder zu Guttenberg (CSU) have said the carmaker, a subsidiary of the ailing US firm General Motors, would only receive state assistance if it put forward a feasible restructuring plan.

European solution for Opel?

Iced up window pane with Opel logo seen through it

The situation at Opel remains bleak

But Foreign Minister and Vice Chancellor Frank-Walter Steinmeier (SPD) also stressed on Sunday that Germany should avoid going it alone in its support for the Rüsselheim-based company. He is in favor of a European solution for Opel. This sentiment was echoed by the Opel works council Klaus Franz in German radio Deutschlandfunk on Monday.

The German federation of family owned businesses, ASU, spoke out against state assistance for Opel on Monday. Albrecht von Hagen, the managing director of the lobby organization for small to medium sized enterprises, warned that it would distort the market.

"If the state helps Opel out, what is going to happen in other businesses, let's say Ford or Volkswagen? Wouldn't that put them in a very trying situation," von Hagen told the public broadcaster ZDF. He said that it would be difficult to explain to VW workers that they were less well-off because Opel was selling more cars as a result of state aid.

Author: Julie Gregson (ap/afp)

Editor: Nick Amies

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