At the time of weak global car demand and new emission regulations, the coronavirus epidemic is undoubtedly bringing the European auto industry down on its knees.
The WHO has declared Europe as the “epicenter of coronavirus pandemic.” Italy is the hardest hit in Europe and the first country to implement blockade measures nationwide. As the coronavirus epidemic swept across the continent, Spain and France also began to emulate Italy. In response to the epidemic, crisis in car demand and unavailability of parts, major automakers have announced temporary closure of European plants or cuts in production.
FCA said most of the company’s European plants will be shut down for two weeks in order to avoid employees becoming infected with the virus and adapting to the declining demand for cars. Specifically, its production facilities in Italy’s Melfi, Pomigliano, Cassino, Mirafiori, Grugliasco and Modena will cease production, while Maserati’s production facility will also be suspended for two weeks. According to Philippe Houchois, an analyst at Jefferies, a well-known Wall Street investment bank, FCA’s Italian plant accounts for more than 65% of its European production and 18% of its global production.
In addition, FCA’s Kragujevac factory in Serbia and Tychy factory in Poland will also be temporarily closed, and other European factories will adopt similar severe epidemic prevention measures.
On March 17, Volkswagen CEO Herbert Diess stated at the group’s online conference that the production at the Deslafa plant, as well as Lamborghini and Ducati plants in Italy, will be discontinued by the end of the week. Volkswagen also revealed that most of the group’s factories in Germany and other European countries will also be prepared to suspend production. The shutdown may last 2-3 weeks.
Daimler Group decided on March 17 to suspend most of its production and part of the administrative department in Europe. The initial plan for this suspension is two weeks. It applies to Daimler’s European car, truck and commercial vehicle plants. The discontinuation will begin this week. In addition to the shutdown, Daimler will also evaluate its global supply chain, which currently cannot be fully maintained. Whether the downtime is extended depends on the development of the situation.
French carmaker Renault said on March 17 that it would suspend operations at its plants in Palencia and Valladolid, given that Spain has declared a state of emergency. In addition, Renault will suspend industrial activities at 12 factories in France, and let 18,000 employees stay home temporarily.
On March 16th, the French automobile manufacturing brand Citroen Group (PSA) announced that its multiple production bases in Europe will be closed until March 27th. According to the plan, PSA Group will close the following factories one after another this week:
— March 16: Mulhouse, France • Madrid, Spain
— March 17: Poissy, Rennes, and Sochaux factories, France
— March 18: Spain 8 plants including Zaragoza Plant • Ellesmere Port Plant, UK • Russelsheim, Eisenach, Germany • Gliwice, Poland
— March 19: Vigo plant, Spain • Mangualde, Portugal • Luton plant, England • Trnava plant in Slovakia
Ford said that due to several workers infected with coronavirus, the company will close its plant in Valencia, Spain, for the remaining days of this week and will re-evaluate after negotiations with the union. Within 24 hours, three positive cases of coronavirus were detected at the Ford Valencia plant. At present, people who have had direct contact with the diagnosed employees are in a state of self-isolation.
The Valencia plant is Ford’s largest plant outside the United States, employs more than 7,000 people, and produces more than 400,000 vehicles each year.
On the afternoon of March 13, Nissan ‘s two plants in Barcelona, Spain, announced the suspension of production. A spokesman for the company said the shutdown will last at least until March 16. Nissan’s Barcelona plant employs approximately 3,000 people, and the two plants are responsible for the production of electric vehicles and pickup trucks.
In addition, Nissan’s largest car manufacturing plant in the UK has ceased production.
Luxury carmaker Ferrari announced on March 14 that the company’s Maranello and Modena factories in Italy will remain closed until March 27. Sources point out that during the factory shutdown, Ferrari workers will receive full pay and that the company will not force workers to use their paid holidays during the shutdown.
Analysts expect European car sales to decline sharply in March this year, and sales for the full year will also fall by 4%. Fidentiis analyst Marco Opipari said that the European auto industry has overcapacity, so closing the plant for a few weeks is not a big problem, and temporarily lost output may recover later. However, the real problem is that on the demand side, people are not buying cars now, and sales in March are expected to be very bad, which will have a real impact on car manufacturers’ earnings.