Automakers worldwide cut production

Automotive Industries, Nov, 2001 by Andrea Wielgat

U.S. auto production for 2001, already softened by eight months of a weakening economy, took a big hit after the Sept. 11 terrorist attacks. The ensuing production cuts have sent American automakers limping toward a weaker-than-anticipated finish for the year.

But how have the attacks affected production in the rest of the world?

For Europe's volume automakers, the attacks mean cuts in production across the board.

Fiat SpA will see the largest impact, with production being cut by 100,000 units by the end of the year. Production losses in October alone were expected to be about 30,000 units, says Gianni Agnelli, Fiat honorary chairman. Fiat, which markets Fiat, Maserati, Alfa Romeo and Lancia cars in Europe and its Ferrari brand in North America, says the cuts are directly related to the terrorist attacks.

In France, Renault SA idled two plants for three days at the end of October. The cuts meant 10,000 unproduced vehicles.

Ford Motor Co. plans to make 30,000 fewer Mondeos by the end of the year and will close its Bordeaux transmission plant in France for eight days. The plant supplies automatic transmissions for U.S. vehicles, including the Ford Ranger and Explorer, Mercury Mountaineer and Lincoin LS.

Volkswagen AG closed its Wolfsburg and Emden plants for one week each to cut production by about 13,000 units. Furthermore, the company's works council says VW is considering idling more production if the drop in demand continues. The shutdown could come before the end of the year or early into 2002.

General Motors Corp. was already planning production cuts as part of its European restructuring. Plants in Antwerp, Belgium, and Bochum, Germany, will see slowdowns in assembly.

European luxury automakers, often immune to bouts of failing sales, are also seeing drops. But most will maintain production and expect stable sales by the end of the year.

For Porsche, the attacks mean a 16-percent drop in sales in the U.S. -- the company's largest market. The automaker says it has seen only a limited number of order cancellations but expects that business activity will eventually return to normal.

"Considering the fact that the United States is now involved in a war on terrorism and considering the shock the American people have felt due to the tragic acts of terror last month, a downturn in sales must be understandable," comments Fred Schwab, president and CEO of Porsche Cars North America.

BMW AG says its global sales remained stable following the attacks. The automaker maintains that the effects of the attacks on its markets are controllable. September sales for BMW in North America were up about four percent compared to the year before.

"We have been affected by the terrorist attacks in the United States. But our sales performances continued to be robust in September too, and on this basis our sales forecast of over 900,000 units can be confirmed," says Michael Ganal, member of the board of BMW AG for marketing and sales.

BMW is not expected to cut production and even says it will increase its workforce by at least 500 people by the end of the year.

Mercedes-Benz saw sales fall two percent during September because of the attacks. But the company still plans to sell more cars than last year's 1.05 million units.

Korean automakers are expecting to see about a 3.5-percent drop in production by the end of the year due to the attacks, says the Korea Automobile Manufacturers Association. Automakers were expected to build about 3.11 million vehicles during the year but are now projecting only about 3 million. The U.S. recieves 34 percent of Korean vehicle exports by volume.

The Japanese market has been tough all year for Japanese automakers, now suffering in both the U.S. and at home. But news of production cuts in Japan by Toyota Motor Corp. were denied by the automaker; it acknowledged the market was tough but still hoped to make sales targets. Most of the production cuts by Japanese automakers will be made in the U.S.