Faced with falling sales, Europe’s carmakers are using all means possible to cut costs.

Daimler – which sold 25 percent fewer Mercedes in November – will work shorter weeks at its main plant in Germany for three months from 12 January.

As employees gathered to hear the details, Thomas Bonin with the Centre for European Economic Research believes it is just the start. He said: “In the long run, the workers can expect more layoffs and they won’t be getting any more big pay hikes.”

After an extended Christmas break there will be four and three day weeks at the Sindelfingen plant and Daimler is also considering cutting working hours at its other factories.

Carmakers across Europe are reducing production as the world economic slump has kept buyers out of showrooms.

In November car sales halved in Spain, fell by 37 percent in the UK, dropped 30 percent in Italy, while Germany saw an 18 percent decline and France 14 percent.

French manufacturer Peugeot Citroen has just closed its largest factory at Sochaux for five weeks, extending the normal Christmas break.

The 14,000 workers at the plant in North East France will not start building cars again until 6 January, but they will be paid.

One worker said: “This is our last day of work, we have to close down. In the present situation, there’s no choice. Still, we’re better off than some; compared to our suppliers, who won’t be paid like we are when they have to stop work.”

Peugeot Citroen is also extending holidays at three other French factories, as well as those in Slovenia, Slovakia, Spain and Turkey.

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