PSA Peugeot-Citroen yesterday slashed its full-year targets and announced “massive” production cuts after third-quarter revenue shrank 5.2 percent.
The employment carnage in the ever-shrinking US auto industry also continued on Thursday as Chrysler LLC announced it would get rid of 1,825 factory jobs and General Motors Corp (GM) trimmed some benefits and said it would make further white-collar cuts.
Peugeot-Citroen CEO Christian Streiff said the company was reacting to the “collapse” of the European auto market, cutting production to prevent a buildup of inventories, raising prices to offset raw materials costs and cutting costs.
PHOTO: AFP
European auto sales are being whacked by the credit crisis, which makes it harder for customers and dealers to pay for cars, and flagging consumer confidence as many European economies enter recession.
Peugeot-Citroen’s stock fell 12.4 percent to 15.68 euros (US$20.09) in Paris after the market opened.
The Paris-based auto maker said sales in the three months through September fell to 13.3 billion euros from 14.02 billion euros.
Anticipating a 17 percent drop in the European market in the fourth quarter, Peugeot-Citroen said it now expects global sales volumes to fall by 3.5 percent from last year, compared with its previous estimate of a growth of 5 percent this year.
“We have reacted very swiftly to this market collapse with exceptional measures to cut production, even though this is obviously detrimental to our 2008 operating margin,” Streiff said in a statement.
“Massive production cuts will be made in the fourth quarter as it is vital that we are correctly positioned to face 2009,” he said.
Shares in cross-town rival Renault SA dropped 10.5 percent to 22.71 euros. The automaker cut its full-year profit targets after market close on Thursday and said third-quarter sales had fallen 2.2 percent.
Renault will close “almost all” of its plants on its home soil for one to two weeks from next week, a trade union representing workers in the factories said Friday.
“Almost all will be closed for one or two week, maybe more. It’ll start next week in Le Mans, which will shut for 15 days, and in Flins, which will also shut for 15 days,” said Fabien Gache of the CGT union.
Also on Thursday Germany’s Daimler AG reported a fall in North American sales and abandoned its earnings forecast for this year, while Italy’s Fiat Group SpA warned that sales could drop 20 percent next year.
In the US, Auburn Hills-based Chrysler said it would eliminate 1,825 jobs when it closes a Newark, Delaware, sport utility vehicle plant ahead of schedule and eliminates a shift at a Toledo, Ohio, Jeep plant.
At GM, senior managers sent a memo to executives on Wednesday saying early retirement and buyout offers to white-collar workers had been well-received but that the company still would have to make involuntary layoffs.
GM, Ford Motor Co and Chrysler together employ about 230,000 people in the US. As of June, the Detroit Three had announced the shutdown of 35 plants since 2005, according to Sean McAlinden, chief economist with the Center for Automotive Research in Ann Arbor.
Meanwhile, thousands of people marched through the streets of Barcelona on Thursday to protest plans by Japanese automaker Nissan to cut 1,680 jobs at its plant in the northeastern Spanish port city in response to falling demand around the world.
Unions said around 10,000 people, including workers from other area auto makers and parts suppliers, took part in the noisy demonstration but police put the figure at around 5,500.
The demonstrators called on the Socialist government of Prime Minister Jose Luis Rodriguez Zapatero to intervene and prevent Nissan from going ahead with the job cuts that Nissan announced on Monday last week.
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