The coronavirus crisis is proving extremely costly to huge numbers of many companies, including those in the automotive sector. One eye-opening example of the difficulties was laid out in stark terms by the head of the Volkswagen Group, who said that the automotive giant is currently spending 2 billion euros a week at a time when revenues have slowed to a trickle because of the pandemic.
If the situation persists, the group may have to cut jobs, VW CEO Herbert Diess told the German TV station ZDF.
He explained that Volkswagen is currently generating no sales outside China and is looking for ways to resume production elsewhere so as not to endanger the company’s workforce.
"We are not making sales or revenues outside of China," Diess said, pointing out that the firm he runs is still struggling with a high level of fixed costs of about two billion Euros a week. “We need to rethink production. We do not yet have the discipline that we had in China at our German locations. Only if we, like China, Korea or other Asian states, get the problem under control then we have a chance to come through the crisis without job losses. It requires a very sharp intervention," he added.
Demand in China is currently recovering, but at this point production has still only climbed to half of pre-crisis levels.
The carmaker is working on ways to safely ramp up production, including by keeping workers at a distance from each other and following stricter better hygiene and disinfection protocols.
Volkswagen employs 671,000 people and has 124 plants worldwide, 72 of which are in Europe and 28 in Germany. It suspended production in Europe at the beginning of March due to the pandemic.
The Volkswagen Group owns the brands Audi, Bentley, Bugatti, Lamborghini, Porsche, Seat and Skoda. Last year, the brands sold a combined 10.96 million vehicles worldwide. The company also produces Ducati motorcycles as well as MAN and Scania trucks.