MUNICH, Germany -- German supplier Wilhelm Karmann GmbH is optimistic that its business soon will rebound from drastic declines in revenue and production.
"Because of the life cycle of the cars we build, we are currently in a downturn. But we are very confident that business will grow strongly in the future," Rolf-Peter Baule, Karmann's executive director of roof systems, told Automotive News Europe.
Karmann expects sales to rebound before the end of the decade as automakers reduce their production capacities and pass on more niche and overflow business to independent coachbuilders.
"You need to be patient," said a senior executive at another contract manufacturer who asked not to be identified. "In the next decade, we (coachbuilders) will have a lot of work to do for OEMs."
Cause for optimism
Another reason for optimism at Karmann is the success of its roof systems business outside Germany.
Karmann recently started production of roof modules for the Pontiac G6 convertible in Plymouth, Mich. Last year Karmann set up a roof-system production line for the Nissan Micra C+C inside the automaker's assembly plant in Sunderland, England.
Karmann also has won two production contracts for convertible roofs it will build in a new plant in Poland.
The company plans to invest close to 10 million euros, or about $12.8 million at current exchange rates, in the roof-assembly factory that will be built at an unspecified site in western Poland. Karmann plans to choose the plant's location by September. Production is scheduled to start in 2008.
"We are in discussions with other manufacturers on obtaining more orders," Karmann CEO Bernd Lieberoth-Leden told Automobilwoche, which, like Automotive News, is published by Crain Communications Inc.
Said Baule: "We need to open a facility in eastern Europe to remain competitive. The competition is there already. The gap in wages is so significant that just staying in western Europe is not an option."
Karmann estimates that labor costs in Poland are about 80 percent lower than in Germany.
Revenues take hit
Karmann's revenues in 2005 were down 31 percent to 1.9 billion euros, or about $2.25 billion, compared with the year before. The company warns that revenues could drop even further this year and next but said the worst is over.
"The situation has stabilized, and if there is a further drop, it will be a very slight one," spokesman Christian Eick said.
Karmann's revenues fell because vehicle production dropped from a record 93,630 units in 2004 to 54,547 cars last year.
Poor demand for Crossfire
The main reason for the decrease was poor demand for the Chrysler Crossfire sports car, which Karmann makes under contract for DaimlerChrysler AG.
Production of the roadster and convertible versions of the car fell more than 65 percent to 12,455 units last year.
The production drop has caused Karmann to cut up to 1,250 of the 5,200 jobs at its main plant in Osnabrueck in northern Germany.
DaimlerChrysler and Karmann are negotiating compensation for the lower production of the Crossfire. The Osnabrueck plant has built the two-seat model for Chrysler since 2003.
You may e-mail Jens Meiners at [email protected]