While the U.S. auto industry is on the brink of collapse, things don't exactly look rosy on the other side of the pond, either. The fallout of the financial crisis is forcing cutbacks at most European automakers, including Porsche, BMW, and Daimler. Bentley and Aston Martin are scaling back production, a sign that even the super-rich are postponing car purchases.

BMW, Daimler Halting Production

BMW is closing several plants for several weeks this month and in January, including its Munich plant, where the 3-series is built. Altogether, BMW wants the stoppages to result in 40,000 units fewer than planned. "The situation on the main markets is very difficult," said Ian Robertson, board member for sales and marketing at the Bavarian carmaker. "We have reduced production and aim to keep supply and demand in a balance in the coming months as well." Much of BMW's 2009 launch plans seem patently unsuited to a market characterized by fuel-economy concerns and personal-income woes: Besides the next-gen Z4 roadster—expected to be priced $10,000 higher than its predecessor—BMW is also launching a smaller Rolls-Royce in the $200,000-plus range, a crossover model resembling a fastback 5-series, and an "M" high-performance version of its decidedly politically incorrect X6 SUV.

Daimler AG, parent company of Mercedes-Benz, will build around 85,000 fewer cars in 2008 than originally planned; workers in several plants, including the main Sindelfingen facility, will stay home for four weeks. Daimler is barred by contracts from laying off employees until 2011, but the company is offering buyouts in order to reduce its ranks by as many as 6000. Daimler must now hope for wild success with the next-generation E-class, to be launched in Geneva next spring.

Porsche Sales Dive in North America

Porsche has been hit hard by declining sales, particularly in the United States. The company just released its U.S. sales figures for November: 1378 units, down 48 percent compared to the same month last year. The previous months were no better: minus 50 percent in October, minus 45 percent in September, and minus 45 percent in August.

At minus 74 percent last month, the Boxster and Cayman models were the worst performers, although that’s largely due to an imminent model changeover. Face-lifted models were unveiled at the L.A. auto show and will hit the market next March. The Cayenne was down 43 percent and even 911 sales took a 38-percent dive despite a complete overhaul with new engines and transmissions this summer. "Sales jumped briefly after the launch, but at the moment, even the 911 is hit by receding sales," said a company spokesman.

Porsche will halt its 911 production lines in Stuttgart for eight days, and there will be an additional three holidays for employees next year. As a result, production will be curtailed by nearly 1800 units. Porsche's Leipzig plant continues as usual, though, as it is ramping up for production of the Panamera four-door, which will be built beginning next spring. Porsche wouldn't confirm that its target of 20,000 units annually still stands. "We will react flexibly," Porsche CEO Wendelin Wiedeking said last month.

Finnish manufacturer Valmet may suffer, too. Porsche contracts with it for assembly of the Boxster and Cayman, and the company will profit from the imminent launch. But if 911 sales don't jump, we expect Porsche's main plant in Stuttgart to take back a sizable portion of Boxster production. Because of tooling, the Cayman is the only model that cannot be moved from Valmet. Porsche will pull the plug on Valmet by 2012 altogether, as the next-generation Boxster and Cayman will be built at a Magna Steyr plant in Austria.

While VW and Audi have been able to weather the crisis far better than other carmakers in Europe, they too are expected to reduce production in 2009. VW already has dismissed a number of temporary workers.

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