Gm and Ford cut production in Europe

In recent months, even as the American economy has slowed, high gas prices have driven consumers out of trucks and SUVs, and the weakening dollar has eaten into automakers' profits, one saving grace for Ford and GM has been their impressive performance in Europe. Despite suffering huge losses at home, the General's sales continued to grow in the Old World, while Dearborn's European division was on pace for a record year. Now, however, it looks like the credit crisis that's spread from Wall Street to Main Street is beginning to reach the Piazzas and Strassen, too, as both companies are cutting Euro production to cope with a sudden slump in demand.

Despite unveiling a slew of products such as the Ka, Kuga, and new Fiesta over the past year, Ford of Europe has begun to see its sales slip and production outpace demand. This is particularly true in Germany, and today the company is moving to cut output at its Saarlouis manufacturing plant and lay off 204 part-time workers. Saarlouis currently employs approximately 6500 workers and builds the Focus, C-Max, and Cougar, but the Blue Oval isn't saying exactly how many vehicles will be cut by the move. The automaker's Cologne plant, which makes the new Fiesta and was recently dubbed "The Love Factory" in an advertising campaign, will continue to run at full capacity.

While Dearborn's move is relatively small, GM is taking more drastic measures to avoid creating a glut in the market. With sales in Western Europe down 9.2% across the industry, the automaker will halt production at all but one of its Old World plants for at least two weeks. Opel spokesman Andreas Kroemer explains that the company is "feeling the effects of the financial crisis" because "people are holding onto their money and not ordering cars." So rather than stockpile unwanted vehicles and lower their residual values (a problem plaguing the company's American division), by shutting down, the General will build 40,000 fewer European vehicles this year. The only factory remaining open during this period is the Russelsheim plant near Frankfurt, which builds the brand-new Opel/Vauxhall Insignia.

Though the shuttered plants are set to go back online in the coming weeks, GM also plans to push for more sales in eastern Europe, and in particular Russia, which has become the number-one car market on the Continent. Despite a strong euro versus the dollar, even luxury automakers like Daimler are cutting production in their home market due to falling demand. Clearly if the current economic slowdown continues to spread, it won't be just American showrooms that are hurting for customers.