The effect of the coronavirus on society and the global economy is unprecedented with grave consequences for the automobile industry, say European car makers.
Indeed, most of the members of the European Automobile Manufacturers’ Association have already announced temporary closures of plants due to collapsing demand, supply shortages, and government measures, and are facing cases of corona infections and quarantines among their employees.
“It is clear that this is the worst crisis ever to impact the automotive industry,” stated Eric-Mark Huitema, ACEA Director General. “With all manufacturing coming to a standstill and the retail network effectively closed, the jobs of some 14 million Europeans are now at stake.
“We call for strong and coordinated actions at national and EU level to provide immediate liquidity support for automobile companies, their suppliers and dealers.”
Huitema went on,“We appreciate the policy measures that have already been announced, which will provide much needed immediate support for employees and companies alike. But we now also need an urgent dialogue with the President of the European Commission to do two things.”
“Firstly, to take concrete measures to avoid irreversible and fundamental damage to the sector with a permanent loss of jobs, capacity, innovation and research capability. Secondly, Europe should prepare to stimulate the recovery of our sector, which will be a key contributor to the accelerated recovery of the European economy at large.”
“We stand ready to work with the European Commission, national governments and other stakeholders to navigate through this unfolding crisis,” Huitema stressed.
Amid the unfolding situation, it is also important to keep the production and supply of spare parts going, as well as vehicle service networks. This is essential not only for the maintenance of vital logistics, but also for the work of emergency services like ambulances, firefighters, law enforcement, relief organisations and other public medical services.
Huitema added, “The free flow of medicines, food, fuels, equipment and supply parts across the EU must be guaranteed under all circumstances.”
“Across the European Union, vehicle manufacturers operate some 229 vehicle assembly and production plants, directly employing 2.6 million Europeans in manufacturing. The wider auto sector provides indirect and direct jobs for 13.8 million people in the EU. “The health of those people that are the backbone of our industry, and their families, is paramount to Europe’s automobile manufacturers.”
The impact has been measured by IHS Markit who said it’s been tracking developments on a daily basis and quantifying the implications of these OEM-announced standstills on the light vehicle market.
The tracker shows that these European shutdowns will cause a reduction of over 880,000 units alone in the announced period of time. With over 256,000 units, Germany is hit the hardest at the moment, followed by Spain with 140,000 and France 100,000 units. And even if production does only halt for the announced periods of time, the assembly ramp-up phase that follows will cause further impacts.
“In North America, we are seeing a similar picture emerging. On 18 March, several automakers in North America also announced their plans to pause production in reaction to COVID-19. At the moment, the announced average downtime is just 6 working days, but looking at the individual plants, the range is between two and 18 days, across the region. Similar to the European situation, it is hard to say if the announced shutdown periods will be enough or if extended periods are most likely to come.”