Famed German Coachbuilder Karmann Files for Bankruptcy
By Michelle Krebs April 8, 2009Legendary coachbuilder Wilhelm Karmann GmbH, which makes convertibles for
Audi and Daimler, has filed for bankruptcy protection from creditors in Germany. The company said "crashing" car markets and contract cancellations have left it unable to pay its bills and its workers.
Karmann said on its Web site that it plans to continue production and maintain as many jobs as possible, while keeping creditors at bay through the courts.
The legendary coachbuild traces its roots to the turn of the century and its most popular and most famous model was the Volkswagen-based Karmann Ghia, from 1955 to 1974.
But Karmann is the victim of plummeting global sales, which show no sign of recovery any time soon, and a worn-out business model. Its revenues fell16 percent in 2008 to $1.72 billion. The company employs 4,500 people worldwide, but will eliminate 1,300 of those jobs. armann's bankruptcy includes its various divisions, including its engineering operation.
Karmann's two largest customers, Audi and Daimler, have seen sales drop and have reduced the number of convertibles Karmann produces for them.
Audi has opted to produce its own convertible version of the A5, which replaces the A4 Cabrio, which means its contract with Karmann will expire.
Daimler will buy from Karmann the open-top roof system for its upcoming Mercedes-Benz E-Class convertible that will succeed the CLK, a company spokesman told Bloomberg News. Daimler's contract for the CLK ends later this year. Karmann also supplies parts for the Mercedes-Benz SLK.
BMW buys roof systems for its BMW 1 Series and Mini Cooper convertibles from Karmann, a BMW spokesman told Bloomberg. However sales of the two models are low, totaling only 4,400 vehicles in March.
"Karmann's business model is dead," Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler, told Bloomberg. "When you're a contract manufacturer dependent on one or two large carmakers struggling to fill their own plants, it doesn't work out. Similar problems with Porsche would spell the end for Valmet if they didn't have Metso's backing."
Indeed, Karmann competitor Metso Oyj's Valmet Automotive has announced it will suspend production of the Porsche Boxster and Porsche Cayman it makes in its plant in Finland for four weeks -- one week per month -- between May and July due to slumping sales orders. Last year, Valmet built 17,500 Porsches and anticipates producing fewer in 2009.
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