Daimler invests in electric car maker Tesla Motors

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Daimler’s investment in Tesla Motors provides both companies with something they desperately need and could be the first step down the aisle toward marriage.

The world’s oldest automaker hitched its electric wagon to Tesla on Tuesday when it bought nearly 10 percent of the company and a seat on its board. Neither side is discussing specifics of the deal, reportedly worth $50 million, but both sides walk away winners.

Tesla gets a much-needed infusion of cash and help building the gorgeous Model S sedan. More importantly, Tesla gains legitimacy as it continues raising funds. Having the company that invented the automobile as a partner makes you much more attractive to investors.

Daimler’s investment buys it a whole lot of battery know-how, something German automakers are short of. And a seat on the board gives Daimler gets a close look at Tesla’s business plan and financials so it can decide if it wants a bigger piece of the action.

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German car downturn worst ever

The trade body warns that car production will have to be cut

The downturn in the German car market is “at a pace and magnitude that has never happened before”, the country’s main auto trade body has warned.

As a result, the German Association of the Automotive Industry said new car sales in 2009 are expected to be the worst since reunification in 1990.

It added that Volkswagen, Daimler and Porsche will all have to cut output, which will “impact” on workers.

Last week Porsche delayed its takeover of Volkswagen, blaming falling sales.

Porsche said there were signs of a “serious slump” in global demand.

Challenging

Volkswagen itself has warned that the current sales environment is “difficult”, while Daimler, owner of Mercedes-Benz, said the situation is “very challenging indeed”.

German car sales are expected to slip to 2.9 million next year, down from the expected 3.1 million for 2008, says the trade body.

Car sales are also lower across Europe, with Italy’s Fiat warning that its 2009 profits could fall by 65%.

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German carmakers: Sales collapse

Car sales in the US collapse:

November Auto Sales: Porsche sales drop by half (Source: Forbes)

November Auto Sales: Daimler AG’s sales decline (Source: Forbes):
Total sales at Daimler’s U.S. operations fell 29.9 percent to 15,991 from 22,819 in November 2007
Sales of Mercedes-Benz brand vehicles last month declined 38.2 percent to 14,102 while the company sold 1,889 of its two-seater Smart models. Smart was introduced to the North American market in mid-January of this year.
Mercedes-Benz USA said its best-selling model family, the C-Class, had a 36.1 percent drop-off in sales, and E-Class sales fell by 49.3 percent.

November Auto Sales: BMW sales fall 26.8 percent (Source: Forbes)

Volkswagen November U.S. Sales Fall 19% on Economy (Source: Bloomberg)

Audi U.S. November sales fall 25.4% (Source: Market Watch)
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Berlin under fire as German car sales collapse

German car sales have plunged to the lowest level since reunification almost twenty years ago, increasing pressure on Chancellor Angela Merkel to abandon budget restraint and back plans for an EU-wide rescue package.

Registrations fell 18pc in November, led by a drop of 36pc in Opel sales. “The crisis has again worsened dramatically,” said Volker Lange, of the VDIK motor vehicle association.

Volkswagen is to suspend production at its Wolfsburg headquarters this month. BMW has cut output in Leipsig to one day a week and Porsche is shuttering its Stuttgart plant for a week. It is just as bad in France where PSA Peugeot Citroen is halting production for a month at Sochaux, the country’s biggest industrial site.

The slump in Germany’s core industry has led to vocal criticism of the Left-Right coalition government. The Handelsbatt newspaper warned this week that the coalition faces a “rebellion” unless it faces up to the gravity of the crisis.

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Daimler to halt output at 2 key plants 4 weeks

*Daimler halts output at two plants four weeks-works council *Daimler shares fall more than 10 percent

(Rewrites with works council and plant spokeswomen)

FRANKFURT, Oct 27 (Reuters) – German carmaker Daimler (DAIGn.DE: Quote, Profile, Research, Stock Buzz) will stop year-end production at two big German plants for four weeks, doubling the normal holiday stoppages given a sharp drop in demand, its works council said on Monday.

The Sindelfingen plant near Stuttgart that makes Mercedes-Benz C-, E- and S-Class models will shut down from Dec. 12 and reopen on Jan. 12, a works council spokeswoman said.

The Untertuerkheim motor and transmission plant will also halt most output from Dec. 15 to Jan. 12, a plant spokeswoman said.

Mercedes-Benz was not immediately available for comment.

On Sunday, Germany’s Frankfurter Allgemeine Sonntagszeitung said the carmaker had imposed a five-week Christmas break for its 36,000 workers at Sindelfingen. Workers normally get only two to three weeks off during the holiday season.

Read moreDaimler to halt output at 2 key plants 4 weeks