Volvo cuts more jobs, Germans promise car aid

By Andreas Moeser, Cheon Jong-woo

BERLIN/SEOUL (Reuters) - Vehicle makers around the world signalled fresh production cuts and job losses amid continued efforts to tackle a slump in demand while Germany unveiled a 1.5 billion euros (1.36 billion pound) support package for its own auto industry.

World number two truckmaker Volvo said it had handed redundancy notices to a further 1,620 workers following a fall in orders. Late last year Volvo said it would cut more than 2,000 jobs in its European truck business and 1,350 in its construction equipment business.

Industry analysts J.D. Power predicted a worldwide fall in auto sales of 8.2 percent in 2009. J.D. Power and Associates President Finbarr O'Neill, speaking at the Society of Automotive Analysts outlook conference on the sidelines of the Detroit auto show, forecast a 12.3 percent decline in North American sales this year, while sales in Europe would be 14.9 percent lower.

The German government said its 1.5 billion worth of auto industry aid forms part of a 50 billion euro stimulus package of investments, tax relief and support for companies. The measures include incentives worth 2,500 euros for new car purchases.

The announcement by Angela Merkel's coalition government will be crucial for the German Chancellor who is seeking re-election in September. It came a day after Daimler announced plans to put about 20 percent of its staff on a four-day week in response to falling sales.

Volvo spokesman Stefan Karlsson said its decision to cut jobs reflected market reality: "It boils down to weak order intake and we have customers that in the present environment don't dare place orders due to the uncertainty. And we have no signs of improvement."

The group makes heavy-duty trucks under the Renault, Mack, Nissan Diesel and Eicher brands as well as its own name.

South Korean sport utility vehicle maker Ssangyong has halted production at both its plants, putting local parts makers at risk and dealing a fresh blow to Asia's fourth-largest, but slowing, economy.