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Europe - economy

European Car Production slumps

Article published on the 2009-06-19 Latest update 2009-06-19 13:09 TU

Porsche ran up a debt of 9 billion through complex stock investment in VW(Credit: Reuters)

Porsche ran up a debt of 9 billion through complex stock investment in VW
(Credit: Reuters)

Luxury car maker Porsche have reported Friday that sales have fallen 15 percent. The global auto making sector is in crisis as consumers avoid buying vehicles amidst the economic downturn. Bad investments crippled the German manufacturer, and Porsche's operating profit was also less than in the same period a year earlier but did not provide figures.

The company ran up a debt of nine billion euros trying to increase its stake in VW through the use of complex stock options. Both companies are discussing merging.

Porshe is now looking to the Gulf State of Qatar for investment. This would be a major shift for its current owners the Porshe and Piech families. A decision should be revealed in three weeks according to Qatar Prime Minister Sheikh Hamad Bin Jassem.

 In Britain, the Society of Motor Manufacturers and Traders has announced that car production has fallen by 43 per cent in May from a year earlier. May's drop was actually the smallest this year and followed a 55 per cent fall in production during April on a 12-month basis.

The British government followed France and Germany in providing a scheme to kick-start Britain’s ailing auto industry. The scheme involves 10-year-old cars being scrapped for in return for a 2,000 pounds (2,250 euros) discount on a new model. The government initiative is scheduled to last until February 2010.