Düsseldorf The automotive industry warns against stopping the production of new vehicles in order to reduce the number of corona infections. “So far, there are no sources of infection among automotive suppliers and manufacturers, and the highest and most comprehensive hygiene standards,” said Hildegard Müller, President of the Association of the Automotive Industry (VDA), the Handelsblatt. If automobile production were to stand still in Germany, production and supply chains would be interrupted not only in Europe, but even worldwide.
The new BDI President Siegfried Russwurm had previously clearly rejected calls for a complete lockdown for the economy. “In 2021 too, industry will be the engine that will drive the economy and prosperity of our country,” said Russwurm. “It is all the more important to keep the industry going, despite the aggravated situation, despite extensive mobility restrictions and large-scale school closings,” emphasized the new head of the industry association.
Economists also point out that even the toughest lockdown steps with factory closings like in France, Italy and Spain could only contain the pandemic for a short time. At the same time, the consequences for industrial production in these countries were devastating, which weakened the entire European economy.
From the perspective of the automotive industry, the economic problems would increase dramatically if production were to be halted. “The car production makes an important contribution to securing the income of many people and is therefore also a prerequisite for the financing of the state’s tasks, especially with regard to the repayment of the immense national debt, which is again significantly increased by the consequences of the corona pandemic have increased ”, added Müller.
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Car manufacturers and suppliers are preparing for more difficult weeks. “The crisis is not over for the automotive industry,” said the VDA President. Small and medium-sized suppliers in particular are hit by the consequences of the corona pandemic and the transformation of the automotive industry with electrification and digitization. “That is the greatest challenge in its history,” added Müller.
“No all-clear” for the liquidity of companies
For a number of companies, the liquidity situation is still tight, “there is no all-clear”. In the year that has just begun, the risk of insolvency is not off the table, and nothing has changed in the past few weeks. If state aid expires this year, the situation for suppliers could even worsen.
The VDA, Germany’s most important industrial association, represents manufacturers and suppliers alike. But the economic consequences of the pandemic are completely different for companies. The car manufacturers are multinational corporations that are compensating for the slump in Europe, for example, with strong business in China.
Many medium-sized suppliers, on the other hand, are focused on Germany and Europe – without corresponding compensation. They are particularly suffering from the fact that German car production slumped last year. According to the VDA, the minus is 25 percent.
VDA President Müller appealed to politicians to actually start funding programs for the automotive industry that have already been decided. Last year, the federal government made available two billion euros to promote future investments in the vehicle industry. Small and medium-sized suppliers in particular should benefit from this.
Müller complained that the promised funds were still not ready. “The program must now be implemented without delay,” demanded the VDA President.
Difficult first quarter
The automotive industry is preparing for a difficult first quarter due to the pandemic. The VDA is betting that the vaccination campaign will pick up speed and that the pandemic will be limited. “We hope for the second half of the year at the latest,” said Müller, “and we hope that the entire country will then breathe a sigh of relief.”
It is possible that there will then even be a boom in terms of car demand, because buying mood and consumer behavior can develop unhindered again. There is already a lot of interest in cars because, unlike public transport, there is no risk of infection in one’s own car.
VDA President Müller noticed an improvement in the vehicle registration offices, which had closed completely last spring. In the second lockdown, new registrations are possible, there are also first advances in digital forms of authorization. “The crisis has revealed how much Germany still has to catch up in digital service.”
According to expert assessments, the current second lockdown has not had as dramatic an impact on the automotive industry as the standstill last spring. “The sales organizations are better prepared,” said Daniel Schwarz, automotive analyst at the investment bank Stifel Europe.
The VDA does not have a solution for the current supply problems with electronic chips. Ford, Volkswagen and Daimler have already started short-time working in various German plants because there are no longer enough electronic components for the cars. “This is a problem that affects the automotive industry and electronics suppliers. We are working intensively on a global solution, ”said the VDA President. The association is also in contact with the federal government.
More: Lack of chips slows down car manufacturers: Daimler continues to throttle production, short-time work at VW