Pandemic hits car industry as marques begin winding down production

German carmakers BMW and Porsche joined a growing list of carmakers on Wednesday to announce a halt in production due to the coronavirus pandemic, as it impacts demand, disrupts supply chains and threatens workers’ health on factory floors.

“Starting today, we will power down our European car factories and the Rosslyn plant in South Africa. The interruption in production is currently planned until April 19,” BMW chief executive Oliver Zipse said on Wednesday.

The Munich-based company’s announcement follows similar moves by its competitors in Germany and abroad.

The coronavirus pandemic is widely expected to trigger recessions in many countries and sharply reduce demand for durable goods like cars.

In February, a month in which the global health crisis was not yet acute, sale of new cars in the European Union already registered a year-on-year fall of 7.4 per cent, an industry group said.

The European Automobile Manufacturers Association (ACEA) blamed the fall on tax changes in several EU countries, as well as “weakening global economic conditions and consumer uncertainty.”

On Tuesday, Daimler and the Volkswagen Group, including its Audi subsidiary, also announced temporary production halts.

Porsche, Volkswagen’s sportscar subsidiary, said the following day that its central Zuffenhausen plant and another factory in Leipzig are to initially close for two weeks starting on Saturday.

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“With these measures our company is contributing towards protecting the workforce and limiting the spread of coronavirus,” Porsche chief executive Oliver Blume said.

“The actual consequences are not yet clear. Therefore it is too early to make predictions. What is clear is that 2020 will be a very challenging year.”

The big three US car companies – General Motors, Fiat Chrysler and Ford – will start instituting a “rotating partial shutdown” of their facilities, the workers’ union said on Tuesday.

On Monday, Fiat Chrysler announced the closure of most of its European plants – six in Italy and one each in Serbia and Poland – while Ferrari halted manufacturing on Saturday.

China-owned Volvo Cars said it temporarily closed its production plant in Ghent, Belgium on Tuesday due to restrictions introduced on social mobility in the country, but there were also supply chain issues, spokesman Stefan Elfstrom told dpa.

The Ghent plant has about 6,500 white- and blue-collar employees.

A similar number work at the carmaker’s Torslanda plant in Gothenburg, western Sweden, where production is still running but the carmaker is following events closely.

Meanwhile, the Swedish carmaker has “ramped up production in China,” Elfstrom said.

The Volvo Group, which makes trucks and buses but does not include the brand’s China-owned car division, said it earlier this week halted production at its plants in France and Belgium.

Next week it would close it main plant in Gothenburg for 15 days, affecting about 1,700 employees, spokesman Claes Eliason told dpa.

Swedish truck maker Scania – part of the Volkswagen Group – said production has been halted in Angers, France with close to 1,000 employees over the national lockdown introduced by the French government. Production at Scania’s main plant in Sodertalje, south of Stcokholm, still on, spokesman Hans-Ake Danielsson told dpa.

Audi and German truck manufacturer MAN are among the first German carmakers to apply for the government’s scheme to pay out salaries for employees who no longer have work – a measure last seen in Germany in response to the 2008/09 financial crisis. It has been revived to deal with the economic fallout of the pandemic.

Manfred Schoch, head of BMW’s works council, said the health of workers must be protected, as well as their jobs and incomes. Even with reduced hours, a BMW employee receives at least 93 per cent of his or her net salary, he added.

Schoch said the Munich-headquartered company would weather the crisis with such measures, as well as flexibility and home office for employees. (dpa)