Porsche: The car industry will register its first bankruptcies in mid-2009

The auto industry could register its first bankruptcies at the end of the first half of 2009, with most affected companies those which built showrooms, especially in the past year with bank loans, Alin Tapalaga, Manager of Porsche Inter Auto, the retail division of the Porsche Romania importer, told Business Standard.

"We will see the first bankruptcies in June 2009. Those who used borrowed funds in 2008 are very exposed because the development plan was sketched based on last year's realities, when revenues were much higher, and allowed for the paying back of loans," Tapalaga added.

Porsche Romania sold 58,790 cars in 2007, up 35 percent year-on-year. The company is the general importer of the Audi, Porsche, Seat, Skoda, and Volkswagen brands. Its main competitors are Renault Nissan Romania, the Auto division of Tiriac Holdings, GM Romania, Trust Motors, and Auto Italia.

According to companies in the field, car dealers will lay off some 10 percent of their sales staff in the coming five-six months, but will not consider laying off part of the personnel working in service units, despite the significant drop in sales in the past few months. Dealers see reducing working hours or initiating part-time collaborations as possible solutions for overcoming the crisis.

Business Standard