Car makers in Europe plan production cuts

Thursday 20 October 2011, 15:44 PM by

Automobile companies in Europe have decided to cut down on production, owing to the continuously decreasing market demand. Automobile giants like Renault, PSA Peugeot Citroen, General Motors and Ford Motors have already prepared a schedule for non-production days at their European plants. The unusual decision is not only attributed to the weakening market demand but also to keep the inventories tight.

European automobile sales charts are expected to show a disappointing September sales. During 2008, the market witnessed a double digit drop when the Lehman Brothers collapsed, gravely affecting the bank lending. Industry experts, who predicted a recovery in the Western Europe car market, are now saying otherwise.

Jonathon Poskitt, JD Power analyst said, “Problems in the wider economy are impacting potential car buyers' decisions as to whether to buy a car now, or maybe hold off until their job is a bit more secure and the economy is improving.”

Car makers in Europe plan production cuts |
Car makers in Europe

The American car maker, Ford has decided to observe several non-production days at its Belgium production plant in Genk. However, Ford has remained undeterred by the halt owing to its new Focus model and moreover, foresees a considerable market demand. On the other hand, Toyota Motors acts cautiously by cancelling weekend production and cutting down on overtime in order to cope up with the decreased market demand.

French based auto makers, PSA Peugeot Citroen and Renault, have also reportedly scheduled non-production days in some of their production plants. Moreover, General Motors has also mulled upon 60 non-working days at its Opel-Vauxhall's plant in Zaragoza, Spain and around 20 non-working days in Eisenach, Germany, towards the year end. General Motors has stated that the production cuts have been undertaken due to the descending market demand, with the aim to bridge the gap till next year, when its new small car’s production commences in Eisenach.

On the other hand, British premium car manufacturers, Jaguar Land Rover and Bentley have not announced any plans to cut down on the production capacity, as they continue to enjoy a favourable global market.

The weak economic conditions have forced major auto makers in Europe to put a hold on their production, while some respond indifferently.

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