No major impact seen on U.S. operations
April 8, 2009 11:33 CET
UPDATED: 4/8/09 2:46 p.m.ET
FRANKFURT (Reuters) -- Karmann, the cabrio rooftop specialist best known for creating the 1950s VW Beetle-based Karmann Ghia coupe, filed for insolvency today.
"The sheer unexpected drop in revenue led to the inability to finance the social plan that was agreed with labor representatives," said the company, which had revenue of 1.3 billion euros ($1.72 billion) last year.
Karmann presented a restructuring plan in September 2008, but deteriorating finances made the company unable to pay for 2,240 layoffs, half of Karmann's 4,460 German workers.
Most famous for the 1950s VW Beetle-based coupe called the Karmann Ghia, the company also developed the retractable hardtop roof first introduced with the Mercedes-Benz SLK. The idea was later copied by competitors including Peugeot for its popular 207cc.
In recent years, a trend an among automakers such as Volkswagen and Daimler to reduce outsourcing the assembly of cars to third-party firms, made it more difficult for Karmann to win new contracts. The trend has already damaged rivals such as Heuliez, Carozzeria Bertone and Pininfarina.
The last Audi A4 cabrio left the assembly line at the end of February and Karmann's only remaining production contract -- to build Daimler's Mercedes-Benz CLK cabrio -- is set to end in mid-May.
In North America, Karmann's U.S. subsidiary, Karmann USA Inc., generated an estimated $236 million in revenue in 2007, the most recent data available, according to the Automotive News list of the top 150 suppliers to North America.
The restructuring of the Karmann's German operations will not have a major impact on Karmann's operations in North America, a spokesman for the U.S. unit said today.
"In response to major declines in North American vehicle sales, Karmann USA has successfully restructured its organization to achieve profitability and has defined new growth strategies both within and outside of the automotive industry," according to an e-mail from the spokesman.
Karmann USA makes convertible tops for Ford, Chrysler, General Motors and VW. The unit operates a technical center and two plants in suburban Detroit along with a plant in in Puebla, Mexico.
The company last week launched a new aftermarket program to rebuild and restore convertible tops in North America.
Only Magna Steyr to survive?
Magna Steyr remains the only contract carmaker to receive significant new business, poaching last June the Porsche Boxster contract from Valmet of Finland.
"Together with the court-appointed insolvency administrator, the goal will be to lead the newly structured Karmann corporate group into a secure future and save as many jobs as possible," Karmann said in a statement.
A spokesman explained that operations would continue just as before since the company had virtually no bank debt. Karmann was forced to file for insolvency under German law since it could not pay for the massive layoff plan.
Cabrio rooftop and door hinge supplier Edscha with revenue of nearly 1.1 billion euros had filed for insolvency at the beginning of February. Edscha was until now the biggest German auto company to fail since Lehman's bankruptcy triggered a violent collapse in auto demand in the fourth quarter of last year.
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