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German Automobile Makers Release Bad News Close to Big Auto Show

August 25, 1993

BERLIN (AP) _ The Frankfurt Auto Show, usually a celebration of the good life on wheels, may well be a morose affair this year - especially after German auto officials said their output of cars and trucks will plunge 20 percent this year.

The prediction made Wednesday was just one of many depressing statistics cited by automobile executives two weeks before the biennial exposition opens. Achim Diekmann, managing director of the German Automobile Industry Association, said German factories will turn out a little more than 4 million cars and trucks this year, down substantially from 5.2 million in 1992.

Weak economies in Germany and the rest of Europe have sliced into demand for new cars, and in turn, employment in the auto industry. Diekmann, who spoke at a news conference in Frankfurt, also said German automakers want to cut another 100,000 workers over the next two years, leaving an industry workforce of 600,000.

″Despite our warnings, politicians, employers and workers have been under the illusion for too long that Germany is an unchallengeable bastion of economic strength,″ said association president Erika Emmerich.

She noted that 70 percent of automobile production costs in Germany go to wages. Last year German employers paid an average of 47 marks, or about $30, per hour for each person in wages and related costs, including taxes and social security programs.

The industry must cut production costs between 20 percent and 30 percent over the next two years to remain competitive with automakers in other countries, she said.

Exports fueled West Germany’s economic recovery after World War II and continue to be the No. 1 factor in the country’s prosperity. But Diekmann said exports will fall this year to 2.1 million passenger cars from nearly 2.6 million in 1992. The German industry is also worried about further damage to the domestic auto market. The Bonn government is pushing for higher gasoline taxes, fees and other costs, raising fears among Germans that driving could be reserved for the rich.

The country’s transportation minister Mattias Wissmann, has indicated that car owners costs will be going up. ″Automobile driving must become more expensive,″ he said.

To help cut costs, the German automaker Volkswagen earlier this year hired away General Motors Corp.’s whiz Jose Ignacio Lopez de Arriortua as a hatchet man for bloated production lines. But the jockeying for his services produced an ugly spat between VW and GM that may further dampen spirits at auto show.

German prosecutors are investigating charges that Lopez and his associates illegally took GM secrets with them when they left the U.S. company.

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