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BMW to Mercedes Skip Summer Breaks to Keep Plants Rolling

Car Manufacturer

Daimler AG will skip traditional summer breaks at most of its car factories with models like the revamped Mercedes-Benz E-Class keeping assembly lines busy even as European auto demand slides to a 20-year low.

Bayerische Motoren Werke AG is also either preparing for new models or keeping plants churning out cars to meet demand. The full order books of the German luxury-car makers contrast with factory shutdowns and job cuts at mass-market rivals such PSA Peugeot Citroen and Ford Motor Co.

“Growth in the U.S. and China more than outbalances the European slowdown for the German carmakers,” said Christian Ludwig, a Dusseldorf-based analyst with Bankhaus Lampe. “Europe is no longer as important for the German luxury-car makers as it used to be.”

Demand from the U.S. and Asia for models like the BMW 3-Series sedan and Audi AG’s A3 compact have insulated the German manufacturers from a deepening recession in the euro area. While the financial crunch and government austerity measures have caused the European auto demand to shrink for six straight years, the German carmakers continue to expand.

“We’re planning for another year of record sales,” Martin Steinlehner, a Mercedes spokesman, said yesterday by phone. “We’re not slowing our production in most of our plants” similar to 2012, when Mercedes sold 1.32 million cars and sport-utility vehicles.

Smart Overhaul

Factories in Hungary, South Africa and China as well as most plants in Germany will work through the summer months, Steinlehner said. European automakers typically stop their factories for two to three weeks for summer holidays, when European demand is normally slack.

A Mercedes plant in Bremen, Germany, will halt for two weeks in July to prepare for the new C-Class sedan and wagon due next year, while Smart city-car production in Hambach, France, will be interrupted in preparation for an overhaul of the two-seater.

Mercedes has been expanding its model lineup with more entry-level small cars such as the new CLA four-door coupe as it seeks to pass BMW and Volkswagen AG’s Audi in sales by the end of the decade.

Mercedes deliveries rose 7.3 percent to 121,360 vehicles in May, the Stuttgart-based company said yesterday in a statement. Sales in the first five months of 2013 advanced 5.9 percent to 562,824 vehicles.

Daimler Gains

“We are posting solid increases in many markets in Europe and Asia, as well as in the U.S., at a time, when the new E-Class and the CLA are just entering the big markets,” Joachim Schmidt, sales chief of the Stuttgart-based carmaker, said in the statement.

Daimler shares declined as much as 73 cents, or 1.5 percent, to 47.22 euros and were down 0.6 percent at 11:33 a.m. in Frankfurt trading. The stock has climbed 15 percent this year, outpacing BMW’s 1.1 percent decline and VW’s 4.1 percent fall. BMW today slipped 0.4 percent and VW advanced 0.3 percent.

BMW, which is also targeting record sales this year, hasn’t scheduled a general summer break at its plants, spokesman Nikolai Glies said by phone.

A current two-week stop in Dingolfing, Germany, is related to maintenance in the paint shop, while SUV production in Spartanburg, South Carolina, will halt for two weeks in July to prepare for the new X5 that will be introduced later this year, Glies said.

In September, Mini production in Oxford, England, will stop for two weeks to prepare for the next generation of BMW’s compact-car brand.

Audi Slowdown

Audi is likewise shutting down some production in Germany to upgrade equipment, Kathrin Feigl, an Audi spokeswoman said by e-mail. Last year, the company only slowed production without closing plants.

Production of the mid-sized A4 sedan in Ingolstadt will halt during the summer holidays to reorganize production lines for a new version, while A3 manufacturing continues. Audi will stop making the A5 coupe, A8 sedan and other upscale models at its Neckarsulm plant for three weeks in August for maintenance.

Audi’s sales rose 6.4 percent to 137,200 cars in May as demand in the U.S. and Asia offset “challenges” in Europe, the VW unit said today.

Elsewhere in the European auto industry, the prospects are less promising. Workers at a plant in Bochum, Germany, owned by General Motors Co.’s Opel unit, will hold a rally on June 10 as they face the prospect of closing.

Ford is shutting a factory in Belgium and two sites in the U.K. Peugeot plans to eliminate 17 percent of its French workforce by the end of 2014 and will close a 2,500-employee assembly plant near Paris next year to trim excess capacity.

“The German carmakers are faring much better than their French or Italian competitors,” said Willi Diez, director of the Institute for Automobile Industry in Nurtingen, Germany. “The split is not only due to the weak European market but mainly attributable to past strategic mistakes. The French and Italian carmakers neglected a timely global expansion.”

(Source: Bloomberg)