Herbert Diess, chairman of Volkswagen Group’s governing board, said on Tuesday that its plants in Italy, Portugal, Slovakia and Spain would shut down this week and were preparing to close other plants in Europe because of the spread of the new coronavirus outbreak, Reuters reported.
The Volkswagen Group owns brands such as Audi, Porsche, Bentley, Bugatti, Ducati, Lamborghini, Seat and Sco. The company said uncertainty over the consequences of the outbreak meant it could not make any predictions about this year’s performance.
Volkswagen’s powerful labor committee said it was impossible to keep a safe distance between factory workers to prevent the crisis from spreading and recommended a shutdown starting Friday.
“Production at the Group’s plants will be suspended in the near future due to the serious deterioration in the current sales situation and increased uncertainty over the supply of parts from our plants,” Mr Dees said on Tuesday. “
Mr Deiss said vw’s Spanish Siat plant, Portugal’s Volkswagen-branded Setubal plant, Slovakia’s Bratislava, Italy’s Lamborghini and Ducati plants would be shut down by the end of the week. The German plant will be shut down for two weeks.
VW said most of its other plants in Germany and Europe would also be ready to shut down, possibly for two to three weeks.
“2020 is going to be a very tough year,” Dees said. The pandemic presents unknown business and financial challenges. At the same time, there are concerns about the continuing economic impact. “
Last month, Volkswagen group forecast that its car deliveries this year would stabilize at 2019 levels and forecast a return on operating sales of between 6.5 and 7.5 per cent in 2020.
However, the current spread of the epidemic is affecting the global economy. It is unclear how severe and how long the VW group will be affected.
As of Tuesday, more than 182,000 confirmed cases of the new coronavirus had been reported worldwide, resulting in 7,155 deaths, according to data compiled by Johns Hopkins University.
Last week, WHO confirmed that Europe was at the centre of an outbreak, and many countries have imposed blockades in an effort to contain the spread of the outbreak.
Tom Narayan, an analyst at RBC, said in a note that he expected VW’s forecasts to contract.
RBC on Monday cut its global auto production forecast, which it now expects to fall by 16 percent in 2020, sharply lowering its forecast for Volkswagen.
As VW prepares to close its European plants, production has resumed in China, with the exception of factories in Changsha and Urumqi.
Volkswagen Group reported a 22 per cent rise in full-year 2019 profit to 16.9 billion euros ($18.5 billion), helped by stronger car sales with higher margins, offsetting the industry downturn.
Profits from the VW, Porsche, West Asia and Skoda brands rose, and the luxury sports car brand Bentley returned to profit, all boosting the group’s profits.
The company said improvements in the structure and price positioning of a variety of models, in particular, made up for the negative impact of lower sales of Volkswagen passenger cars, launch costs and exchange rates.
Philippe Houchois, automotive analyst at Jeffries, said the results were impressive. “Very reliable sales data and strong free cash flow, in part from working capital. “