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Audi may suspend high-end car production if slump deepens

Audi A4 front parts with emblems are pictured at the production line of the German car manufacturer's plant in the Bavarian city of Ingolsta
Audi A4 front parts with emblems are pictured at the production line of the German car manufacturer's plant in the Bavarian city of Ingolsta

By Andreas Cremer

BERLIN (Reuters) - Volkswagen's Audi division may suspend production of high-end luxury vehicles early next year if a slump in western European auto markets worsens, Audi's top labor leader said.

German premium car makers were considered largely immune to the crisis buffeting mass-market European auto manufacturers. But cracks are beginning to show as slowing economic growth and persistent unemployment deter customers from making purchases.

The world's number-two luxury car maker has twice shuttered its second-biggest plant in Neckarsulm in early and late October for a week each time, affecting production of models including the A7 coupe, the A8 sedan and R8 sportscar.

Neckarsulm, which lies near Stuttgart in southwest Germany, builds models ranging from the A4 sedan to Audi's most expensive cars such as the 70,000-euro A8 and the 125,000-euro R8 Spyder.

The October stoppages "are sufficient for a short-term period", Audi works council chief Peter Mosch told Reuters.

"Should the market situation deteriorate considerably at the start of next year, then it is possible that further action may have to be taken," said Mosch, who also sits on the supervisory boards of Audi and its parent VW.

The number of vehicles assembled by Audi in Neckarsulm may fall 6.8 percent next year to 243,348, according to research firm IHS Automotive. Mosch said no further cutbacks were planned "from a present-day perspective."

Audi, which accounts for almost half of VW group's operating profit, is not the only luxury-car maker to address weak demand.

Daimler said last month it had cut production of its flagship S-Class sedan until the next version of the model was ready to debut in mid-2013.

Porsche, also owned by VW, will scrap Saturday shifts from January at its main factory in Zuffenhausen where the sportscar maker assembles the 911 model and the Boxster/Cayman series.

Audi Chief Executive Rupert Stadler said at the Paris auto show on September 27 that the European car market, destination of half of Audi's global deliveries, may stagnate in the next year or two.

Possible stoppages could also affect Audi's main plant in Ingolstadt at a later stage, Mosch said.

Audi produces about 1,200 cars a day in Neckarsulm and about 2,500 in Ingolstadt, where the A3 compact and Q5 series are made. Output at Ingolstadt has been disrupted by refittings at the plant because of changes in A3 production.

(Reporting by Andreas Cremer; Editing by Tom Pfeiffer)

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