European car industry faces “severe” financial crisis

Europe’s car makers may be facing the worst crisis they’ve ever dealt with as production ceases and retail operations close during the coronavirus-induced lockdown.

New car registrations have plummeted in the past few weeks as nationwide lockdowns are put in place. France has reported that registrations are down 72% compared with March last year.

Most national figures have yet to be released, but they’re likely to be similarly low and will almost certainly be far worse still in April.

It’s estimated that the production losses from production shutdowns across the European Union (EU) amount to 1.23 million vehicles so far.

European automotive industry association the ACEA has called for “strong and coordinated action” to ensure manufacturers, dealers and the wider supply chain are protected as income falls by an unprecedented amount for many.

The ACEA’s director general has called for the president of the EU’s European Commission to “take concrete measures to avoid irreversible and fundamental damage to the sector with a permanent loss of jobs, capacity, innovation and research capability”.

Some 13.8 million people work in the automotive industry across the EU, with 229 assembly and production plants employing 2.6 million of those in manufacturing.

The ACEA claims the pandemic will have “grave consequences… far beyond what we can forsee now” for manufacturers and their employees.

Car makers are still spending huge amounts of cash despite not producing any cars. German media reports that Volkswagen, BMW and Mercedes-Benz parent company Daimler held a crisis call with German chancellor Angela Merkel on Wednesday.

Volkswagen Group CEO Herbert Diess has said that jobs may have to go if production doesn’t restart soon, because the company is burning through around €2 billion (£1.75bn) per week.