Car giants warn of continuing slump

FOUR of Europe's leading car makers have warned of a continued slump in their main markets in the second half of the year as they reported a mixed bag of interim results.

Volvo reported an operating loss of Skr835m (pounds 81.7m), up from Skr559m a year earlier. After financial items, it made a loss of Skr103m against a profit of Skr1.16bn last time.

The Swedish group made no forecast for full-year earnings but said expectations of an improvement in the car market had not been realised and no quick improvement was expected.

Renault, with which Volvo has cross-shareholdings, staged a sharp recovery in the first half with pre-tax profits rising 560 per cent to Fr5.4bn (pounds 567m) from Fr962m. The company said productivity had increased 20 per cent, while profits in the full year would be 'greatly superior' to the Fr4.19bn earned in 1991. However, it also warned that the downward trend in the European market could accelerate.

This was echoed by Daimler-Benz of Germany, which predicted profits for the year would be flat at DM1.94bn (pounds 692m) in the light of growing economic uncertainty. Interim net profits rose 16 per cent to DM1.02bn, mainly due to smaller tax payments, while operating profit slipped 3.3 per cent to DM2.02bn. Group sales rose 9 per cent to DM46.3bn, helped by a 9.3 per cent rise in sales at Mercedes-Benz.

Volkswagen reported a 2.8 per cent increase in interim net profit to DM445m. Domestic deliveries rose only 1.4 per cent to 691,309 units, but sales to Western Europe increased 12.8 per cent.

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