Currently reading: VW braces for “very difficult year” as pandemic shuts factories
Volkswagen will gradually close most of its European plants to protect against coronavirus, with “unknown operational and financial challenges”
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2 mins read
17 March 2020

The Volkswagen Group has said it is “almost impossible” to forecast its 2020 performance as the global coronavirus pandemic unfolds, with most of its European factories set to gradually close in the coming weeks. 

“The health and safety of our employees and their families is the most important priority in the situation and my primary objective is to slow down the spread of coronavirus as much as possible” CEO Herbert Diess said in a live-streamed annual media conference. 

The measures include halting production at the VW Group’s plants in Spain, Portugal, Slovakia and Italy “before the end of this week”. Most other German and European plants will shut “in the coming weeks”. Along with virus spreading fears, the Group cites “significant deterioration in sales” and “uncertainty over plants supplies” as core reasons for shuttering production.

The Wolf of Wolfsburg: Autocar meets VW boss Herbert Diess

However, production has been resumed across a number of its Chinese factories, as the virus appears to be brought under control locally. As China's largest foreign carmaker, Volkswagen's financial exposure through the crisis was acute, with the sales slump likely to have a significant effect on its 2020 performance - although Diess claims consumers are now returning to dealers in the region. 

Diess admitted that the pandemic presents the VW Group with "unknown operational and financial challenges" but was upbeat about a recovery, stating “we will succeed in overcoming the corona crisis by pooling our strengths and with close cooperation and high morale in our group”. 

The uncertainty over 2020 contrasts starkly with the message of positivity Diess portrayed over 2019, which was a “very successful year” for the group. Overall operating profit rose 22% to 6.9bn euros.

The VW passenger cars division posted revenues of 88.4bn euros - 4.5% higher than 2018 - and an operating profit before special items increase from 3.2bn to 3.8bn euros. Skoda, Seat, and Porsche all posted sales revenue increases of between 10 and 15%, with Bentley returning to profit with a substantial 35.1% boost in revenues and 3.1% return on sales (up from -18.6% the previous year).

With the global economy increasingly impacted by the pandemic, most large car making groups have seen massive losses in the stock market. VW is not alone, with its share price down 38% since January. However, Diess maintained that the Group’s significant investment in electrification would not be “reprioritised” 

Read more: 

Volkswagen to launch 34 new models in 2020

Audi to lead Volkswagen Group's R&D efforts

New 2020 Volkswagen Golf: first prices and specs announced 

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Comments
4

17 March 2020

All those with breathing difficulties brought on and exacerbated by diesel fumes will need to self isolate.

17 March 2020

What will happen when thousands of people can no longer aford their PCP or Lease payments because they have been laid off due to Covid 19 ?

17 March 2020

VW have deep pockets to help weather the storm, but it's quite likely a major car maker will go under as a result of this crisis. There is likely to be very significant disruption ahead with car sales falling to a trickle.

17 March 2020

Maybe when this is all over, VW and other manufacturers will have to reduce their extortionate prices to get customers coming through dealership doors again (once some people have got used to not changing their car as frequently as they used to).

 

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