Volkswagen plans a longer Christmas

VOLKSWAGEN AG, Europe's largest car maker, may halt production at its biggest plant for more than three weeks starting next month to help cope with the shrinking auto markets.

The factory in Wolfsburg, Germany, where VW is based and builds the next generation of its best-selling Golf hatchback, will close between December 18 and January 11, according to a company official. The car maker may also shutter parts of the plant on December 5, the official said yesterday, according to Bloomberg News.

Volkswagen employs 44,000 people in Wolfsburg, a quarter of its 175,000-strong German workforce. Production is being cut after the company's European sales fell 7.6 percent last month, even with a lineup of compact models such as the Golf and Polo that is regarded as well suited to customer requirements for smaller, less-costly and more fuel-efficient cars.

"No company is able to extricate itself from this crisis, not even Volkswagen," said Frank Schwope, a Hanover-based analyst at NordLB with a "sell" recommendation on the stock. "It would be a delusion for any car maker to expect to get through this maelstrom without extending the Christmas vacation."

VW fell as much as 46.50 euros (US$60.16), or 14 percent, to 283.21 euros in Frankfurt trading, the most since November 3. The decline was intensified as investors sold stock to match a reweighting of the company in global indexes compiled by MSCI.

Approval

The measures at Wolfsburg have yet to be approved by management and labor representatives, the official said. As well as the Golf, the factory makes components for the Golf-based Variant combi and assembles the Touran minivan and the Tiguan compact sport-utility vehicle.

European car makers are firing or laying off workers to rein in production and clear inventories of unsold vehicles that have grown since the start of the year.

PSA Peugeot Citroen, Europe's second-biggest car maker, plans to slash 3,550 posts through voluntary departures, among them 2,700 office jobs, the Paris-based company said on November 20. The cuts follow the elimination of 15,000 positions in the past two years as the company sought to reduce costs.

Renault SA, the French No. 2, has almost "no production left to cut" this year after it announced 6,000 job cuts in the summer and shuttered many of its plants through December, Michel Gornet, head of manufacturing and logistics, said on November 18.