Audi adding about 500 workers this year, output expected to jump 21%

Big names taking on extra staff Audi defines market slump with 57% boost in A8 production, on expectations that the luxury car industry will weather the stock market slump.

Albrecht Reimold, head of the carmaker’s factory in Neckarsulm, Germany said, “We’re extremely busy at the moment and have every reason to believe this uptrend will continue for some time, certainly through next year.”

Mr. Reimold also said, Audi’s second-biggest plant where its 111,100-euro R8 sports car and the 48,900-euro A7 four-door coupe are built is running extra shifts after adding about 500 workers this year. He expects output to jump 21% to a record 260,000 vehicles in 2011.

The busy assembly lines are part of broader expansion at the Volkswagen unit. These are adding capacity in Spain and boosting production in China. Audi, Bayerische Motoren Werke AG and Daimler’s AG’s Mercedes-Benz are adding shifts, shortening breaks and building new factories even after the Stoxx Europe 600 index fell 23% from its February peak.

Mr. Reimold said at the plant which employs 14000 people, “We’re aware of expectations that conditions may change to the worse, but we trust our own forecasts suggesting that things will stay good.”

The three largest makers of upscale cars Mercedes, BMW and Audi are targeting record deliveries this year, boosted by growing wealth in China and a rebound in spending in the US after the recession.

Marcus Kappler, deputy head of economic analysis at the ZEW Centre for European Economic Research at Mannheim in Germany said, still with US consumer confidence slumping to its lowest since the 2009 recession and Europe saddled with a government debt crisis even high-end car manufacturers will feel the slowdown eventually.

Mr. Kappler said, “BMW and other German high-end manufacturers are bucking the economy’s stagnant trend for now, over the longer term German car makers won’t be able to decouple themselves from an economy that’s clearly normalizing”.

>> Henner Lehne, a Frankfurt-based analyst at research firm IHS Automotive said, the slowing economy could hit demand for high-end models next year.

He further said, the research company may lower its forecast for western European luxury-car deliveries in 2012 from its current prediction of a 6.4 % gain to account for the “new economic realities.”

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>> Mr. Lehne said, “Customers are becoming more cautious, big-ticket items sell less well in difficult times.”

IHS has already reduced its projection for US vehicle demand this year by 200,000 light vehicles to 12.5 million cars and trucks. It also lowered its forecast for 2011 German passenger car sales by 25,000 vehicles to 3.24 million.

Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen said, “Next year could be tougher. Slowing economies, volatile financial markets and austerity policies to fight debt may cause world auto markets to stagnate in 2012.”

Dudenhoeffer said, “This unfavorable constellation may bring about a distinct cooling of world car markets, adding automakers face excess capacities and shrinking profits after expanding production and hiring this year.”

>> IHS’s Mr. Lehne said, a slowdown may not hit luxury-car makers as hard because their customers have money to spend even during a downturn.

>> Audi is adding 1200 technicians and engineers this year to bolster its challenge to BMW.

>> A spokesman for the maker of BMW, Mini and Rolls-Royce vehicles, Jochen Frey said, “The demand for vehicles is still very high.”

The unit which accounts for more than 40% of Volkswagen’s profit suspended summer holidays at its main factory in Ingolstadt to maintain output of the Q5 SUV. It also extended around-the-clock production of the Q7 SUV at a plant in Bratislava, Slovakia, until the end of the year.

At the Neckarsulm plant, a third shift for the A8 was added in July which took its daily production to 180 vehicles from 115. The plant is also being refitted to ramp up production of sporty “S” variants of the A6, A7 and A8 models that will hit showrooms next year.

>> The plant is due to produce 300,000 vehicles in 2012 which is up from 260,000 this year and 180,000 in 2009 when the financial crisis hit sales.

>> Head of the carmaker’s factory Reimold said, “The plant is buzzing.”

>> He said, “There’s no respite even though we’re in difficult times.”