Auto industry switches to crisis mode

This week VW, BMW and Audi present their annual figures, but the outlook is rather bleak. Not only in China, but also in Western Europe, demand is dropping and the corona crisis is hitting the automotive industry in the middle of a historic phase of change.

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Germany's car manufacturers are still demonstratively relaxed and are sticking to their 2020 sales targets, but that could change quickly as Europe and the US are now severely affected, even if there are signs that China could recover in the next few weeks.

Car manufacturers shut down plants
The Corona Virus has become a global pandemic and has infected Europe. More and more car manufacturers are closing their plants in Europe or throttling down production. FiatChrysler will suspend production in Italian factories, Serbia and Poland for at least two weeks. The Italian carmaker Ferrari has closed its Maranello and Modena plants, and the Opel (PSA) will close all plants in Europe by March 27th.

Also German car manufacturers are also starting to cut production. As of today, work in the Opel plants in Eisenach and Rüsselsheim will be suspended. VW has restricted Seat's production in Martorell, Spain, and the VW plant in Navarra. According to insiders, SUV production at the main plant in Wolfsburg could also be suspended for two days. And at Audi, production in the Brussels plant is stalling, where the flagship electric trolley E-Tron is being manufactured.

Experts expect China's car demand in Europe to shrink massively because in Corona times, hardly anyone thinks about buying a new vehicle. People prefer to stay at home.

Pessimistic outlook for the European car market
As German broadcaster ARD reports, industry expert Ferdinand Dudenhöffer predicts a drop in sales of at least eleven percent to around 12.74 million vehicles - in an optimistic scenario. He assumes that the corona epidemic will calm down in three months and that the financial system in Europe will not collapse. The Western European car market would have shrunk in 2020 anyway, but Corona would have added another minus of almost a million fewer units.

Can the losses in China be compensated?
In China, demand is likely to recover somewhat in the next few months, but industry experts doubt whether the dip has been leveled out since the beginning of the year. Professor Stefan Bratzel, head of the Center of Automotive Management (CAM) at the University of Applied Sciences for Business in Bergisch Gladbach, does not believe that the losses from the first quarter of 2020 can be made up and predicts a ten percent drop in China for 2020.

How are the suppliers doing?
The automotive suppliers are particularly hard hit because they are in the middle of the technology transformation. The major players in the industry, such as Conti, slipped into the red last year and are considering plant closings and the reduction in personnel. To make matters worse, the climate policy requirements from the EU headquarters in Brussels and the impending penalties if the CO2 requirements are not met.

Source: ARD