Berlin - German auto parts groups Continental AG said Thursday it had slumped into the red last year amid growing uncertainty about the group's future and a deepening sense of crisis gripping the global car sector.

Hanover-based Continental booked a net loss of 1.12 billion euros (1.4 billion dollars) in 2008. That compares with a 1.02-billion-euro profit in 2007, the year of the group's debt-based 11.4-billion-euro purchase of the car parts company VDO from Siemens.

Commenting on the results, Continental chief Karl-Thomas Neumann described the problems facing the car industry as "dramatic" with his company also the subject of an increasingly uncertainty takeover launched by ball-bearing maker the Schaeffler group.

Bavarian-based Schaeffler has been pressing for state aid to help it limp through the current crisis.

Continental's full-year loss came in the wake of a fourth-quarter net loss of 1.49 billion euros compared with a 195-million-euro profit run up in the same period in 2007.

Schaeffler's billionaire owner Maria-Elisabeth Schaeffler attended an emotional employees' rally on Wednesday, which had been called to press the case for the federal government stepping in to throw the privately owned group a financial lifeline.

In the meantime, Schaeffler is also attempting to secure investors to help it deal with the about 11 billion euros in debt arising from Continental's takeover of VDO.

The drama surrounding Schaeffler's bid for Continental came as fresh evidence emerged of the upheaval gripping the global auto business with car markers scaling back production in the face of steep falls in demand.

Giant US carmaker General Motors' German offshoot Opel appears to have won a reprieve from closure as part of the Detroit-based group's new far-reaching restructuring plan.

But media reports said Thursday that the American automaker's Swedish loss-making car group SAAB said was considering applying for insolvency.

As a further sign of the pressures facing the world car industry, Germany's Daimler AG, the manufacturer of luxury Mercedes Benz saloons, warned this week that it faced slumping into the red during the first-quarter of this year after posting a fourth quarter loss.

"A more detailed statement on earnings will only be possible later in the year, when the development of the world economy and the automotive markets can be better assessed," Daimler said.

Echoing these comments Continental said the turmoil unfolding in the car sector mean that it was able "to reliably assess" the current situation as to produce a projection for this year.

Reflecting the VDO takeover, Continental said group sales jumped by 46 per cent last year to 24.2 billion euros.

But ruling out dividend payments, Neumann said Continental's "top priority is to continue reducing the corporation's net indebtedness" with the group planning to press on with a cost-cutting program. (dpa)