TURIN -- Extended holiday vacations at most European car assembly plants had a big effect on output during the first month of the year.
January production was down 39.0 percent to 1.03 million units compared with the same period in 2008, according to estimates from J.D. Power Automotive Forecasting.
Automakers slowed or stopped making cars in late December and early January to let their dealer networks try to clear some stock. The plan seemed to work. The percentage decline for new-car sales was less severe than it was for new-car production. Automakers sold 903,724 units last month, a decline of 30.9 percent compared with January 2007, J.D. Power Automotive Forecasting data shows.
Automakers were forced to slash European production because of the late-2008 collapse of new-car sales. Most did not move fast enough and were left with record inventories.
Having a high number of unsold cars is bad news for cash-starved automakers because it increases their net industrial debt.
Although in October 2008 it started cutting production at twice the rate of its sales decline, Renaults automotive debt still rose to 7.94 billion in 2008 from 2.09 billion in 2007.