Mercedes cuts SUV production (U.S)

More evidence of global economic downturn has come with Mercedes-Benz’s announcement that it intends to slash production over the next four months.

40,000 units of previously-planned production will be lost, with cuts taking place on both sides of the Atlantic. The Alabama plant that builds the ML and GL SUVs faces the brunt of cutbacks after American SUV sales were hit by economic uncertainty and the rising oil price.

Mercedes bosses will be more alarmed by a sharp decline in sales of its most profitable model, the previously rock-solid S-Class. According to the company insiders, the ‘S’ is down by 23% year-on-year in America.

Full-blown recession in the U.S would cause serious distress to all the established premium car makers, as it is the biggest market for almost all luxury models. Mercedes is responding to the decline in sales by considering taking smaller models to the ‘States, including the next-generation A-Class and B-Class compact hatchbacks.

French car sales plummet (UK)

Production of French cars has fallen sharply according to a report. This provides proof that Europe's car makers are facing an increasingly tough business climate.

Citroen has done better than Peugeot and Renault, helped by its aggressive pricing strategy and a recently refreshed model line-up, with output slipping my just 1% last month compared to the same period last year.

Peugeot has suffered the worse sales, posting a 5% fall in year-on-year volume, while Renault's production has fallen by more than a fifth.

Renault has been hit by disappointing sales for the new Laguna along with slow demand for the Espace and Vel Satis (latter is still sold in Europe and not in UK). The current Megane is also running out to replacement, further depressing the figures. The company is considering reducing production at the Sandouville plant, which produces the Laguna, Espace and Vel Satis, to just one shift.

Despite the sliding sales, Renault boss Carlos Ghosn has said he is confident that the manufacturer will meet its operating profit target for this year.