The company well-known for cars such as the 1950s Volkswagen Karmann Ghia coupe and convertible filed for insolvency on Wednesday. The German coachbuilder was forced to file for insolvency by law when it could not pay for a recent layoff of 2,204 of its workers.
An unexpected drop in revenue was cited as the reason for the company's inability to finance the plan it had agreed to with labor leaders. Karmann had proposed a restructuring plan in September 2008, but a lack of revenue made the company unable to pay for the layoffs which consisted of roughly haft its German workforce.
Coachbuilders, like Karmann, have found it hard in recent years to win new contracts. The company built its last A4 cabrio in February and its only remaining contract-to build the Mercedes Benz CLK-will end in May. Automakers such as Volkswagen and Mercedes are now focusing on more in-house manufacturing, eliminating the need for third-party firms.
In a statement, Karmann said: "Together with the court-appointed insolvency administrator, the goal will be to lead the newly structured Karmann corporate group into a secure future and save as many jobs as possible." A spokesperson for the company said that the company had virtually no bank debt and would therefore continue operations.
Source: Automotive News