Volkswagen is going to shut down its factories in Italy, Portugal, Slovakia, and Spain this week, followed by the rest of its factories across the old continent due to the coronavirus outbreak.
Europe’s biggest car maker added that the uncertainty surrounding the pandemic meant it’s impossible to issue any forecasts for the company’s performance this year, Reuters reports.
Volkswagen’s powerful works council also recommended a shut down of production, starting this Friday, after concluding that it’s not possible for workers at the factories to maintain a safe distance from one another to protect from the virus.
“Given the present significant deterioration in the sales situation and the heightened uncertainty regarding parts supplies to our plants, production is to be suspended in the near future at factories operated by group brands,” said VW’s Chief Executive Herbert Diess.
VW will halt production at its factories in Spain, Portugal, Slovakia, and at the Lamborghini and Ducati plants in Italy before the end of this week. Meanwhile, most of its other German and European facilities are preparing to suspend production for two to three weeks.
“2020 will be a very difficult year. The corona pandemic presents us with unknown operational and financial challenges. At the same time, there are concerns about sustained economic impacts,” Diess said.
VW’s move follows that of PSA, Fiat Chrysler, Ferrari, and Ford, all of which have suspended production on factories located in Europe in a bid to stop the spread of coronavirus.
Toyota Shuts Down Production In France
Toyota has also announced it’s suspending production at its plants in France, Portugal and the Philippines. The shutdown in France will take place from March 18 to 31, pausing production of the Yaris hatchback, while the Portugal factory, which builds the older-generation Land Cruiser 70, will close for two weeks, from March 16. The shutdowns do not affect any vehicles exported to the US market.
Toyota’s factory in the Philippines, which produces the Yaris-based Vios and the Innova MPV, will be closed from March 17 until mid-April.
Analysts believe that shutting down factories is the only viable option automakers have in the current COVID-19 crisis. “The shutdowns will put a lid on costs and eventually enable stock reduction when demand picks up, avoiding swollen inventory,” said David Leggett, Automotive Editor at GlobalData.
“Much depends on how economies react to the crisis over the next few weeks and also whether government actions and support in response to the crisis can restore already damaged consumer and business confidence,” Leggett added.
