Long, Rocky Road Ahead for Automakers: Diess

Volkswagen CEO Herbert Diess knows the viral headwinds facing his company won’t ease in a few weeks, nor will the need to curtail production in the face of rampant coronavirus infections.

Following a week that saw the auto giant idle production in Europe and the United States, Diess said the temporary plant shutdowns are just the beginning. His words no doubt echo the thoughts of most, if not all, Western auto execs.

In a LinkedIn post noticed by Reuters, Diess said, “Most of our factories are closing for two weeks, in some regions for three. It is likely that these measures will last.”

While not in the same boat as hard-hit nations like Italy and Spain, Germany, likes its neighbor, France, face growing numbers of coronavirus infections. The country’s case load is expected to top 20,000 on Monday as new measures aimed at flattening the rise in infections go into effect. German Chancellor Angela Merkel recently banned public gatherings of more than two people. Businesses of almost all types are shuttered.

“Volkswagen will support these measures as much as possible in order to save as many people as possible,” Diess wrote. “That is our first priority.”

In the U.S., Chattanooga Assembly went dark on Saturday for a period of one week; following a deep-cleaning, plant execs will make a judgement call. It’s not expected that the viral environment in the U.S. will get any better for a number of weeks, and the same goes for Europe.

The spread of the virus is unlikely to have stopped in several weeks,” Diess wrote, stating the obvious. “So we have to be prepared to live with the threat for a long time — until effective medication or vaccination becomes available. Until then. preventing the transmission and slowing down the spread are the main measures.”

True everywhere, but where does that leave VW and its rivals? Well, for starters, VW is leveraging its manufacturing capacity and supply chain to provide Germany with respiratory masks and other essential health items; we’ve seen General Motors and Fiat Chrysler make moves towards this on the other side of the Atlantic. At the same time, however, the business of building cars continues in whatever form the current situation will allow.

Like Ford, the German giant aims to firm up its financial footing, but there’s still many other areas in which to act, Diess said.

“Cutting edge measures to secure liquidity, but also the ability to deliver, for spare parts or the continuation of critical vehicle projects, such as the ID.3 startup, the supply of battery cells, or the work of our crisis teams, and much more — are extremely important to deal with the Crisis,” Diess said.

That capital “c” is no typo.

[Image: Volkswagen]