Karmann folds after 107 years

COACH-builder Karmann – the largest independent motor vehicle company in Germany – has filed for bankruptcy in the biggest automotive supplier failure in German history.

The move by the 107-year-old company reflects the spreading malaise in the out-sourcing and contract-assembly sector in Europe.

Major manufacturers are pulling work back inside to try to maintain volumes in their own plants, leaving out-sourcing companies like Karmann, Heuliez in France and Valmet in Finland struggling to survive.

Karmann is the second German manufacturer of mechanised convertible tops to fail in a matter of weeks, after the insolvency of Edscha in February.

Edscha was at the time the largest German automotive parts company ever to fail, but has now been surpassed by Karmann.

Karmann directors said they were confident the company could be restructured and contine trading, especially as it was virtually free of bank debt.

LefT: Karmann Ghia Convertible.

Best known for the famous VW Beetle-based sports car concocted in conjunction with Italian styling house Ghia, Karmann was also responsible for the recent boom in folding hardtops for convertibles in Europe.

It was a Karmann-designed roof that Mercedes-Benz first installed on the R170 SLK released in 1997. The idea was quickly copied by Peugeot for its bustle-bummed 207CC.

Karmann knew it was heading into dangerous waters last year as it could not find an assembly contract to replace the Audi A4 Cabrio work that ended at the end of February.

In September, it unveiled a restructuring plan but the market deteriorated so quickly it was unable to find the money for the entitlements it was to pay to the 2240 people – half the workforce – that were to leave the company.

Its only contract is to assemble the Mercedes-Benz CLK cabrio, but that work will end in May.

Directors said the sudden collapse of the car market meant Karmann no longer had the cashflow to fund the retrenchment of half its workforce, forcing it to seek protection in a bankruptcy while it reorganised.

Valmet has also run into trouble as it recently lost its Porsche Boxster assembly contract to Austria’s Magna Steyr. However, Valmet is scheduled to start production of Fisker’s new electric sedan later this year, and that may make up for the lost Porsche volume.

In France, there is concern surrounding the future of the 90-year-old Heuliez.

The company has a proud history. It has produced 350,000 convertible roofs for Peugeot’s 206CC and also assembled the entire Opel Tigra convertible.

Since 1985, it has assembled 450,000 cars of different types, but the contract on its last remaining model, the Tigra Twin Top, is set to wind up by the end of 2009.

Heuliez has been under court protection from its creditors since 2007 and will learn on April 14 whether the court will place it into bankruptcy.

A scheme involving India’s little known Argentum Motors came to nothing when Argentum filed to come up with the agreed €20 million ($A37.4 million).