Carmakers curb European production as coronavirus hits

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Carmakers including Fiat Chrysler (FCHA.MI), VW (VOWG_p.DE) and its premium unit Audi (NSUG.DE) throttled back production at their European plants on Monday as fears over the coronavirus took their toll on producing goods.

Audi said it is struggling to keep production running at its plant in Brussels, Belgium because some workers had downed tools over concerns they were exposing themselves to the virus.

The topic of how to protect employees was now the subject of discussions between management and unions, the carmaker said.

Fiat Chrysler Automobiles (FCA) is halting production for two weeks at most of its European plants to help protect staff against the coronavirus pandemic and adjust to a slump in demand, the Italian-American carmaker said on Monday.

Italy has been the European country worst hit by the crisis and the first to enforce a nationwide lockdown, which has now been replicated by Spain and to a lesser extent France as the virus sweeps through the continent.

Last week some Spanish plants of the Renault-Nissan alliance and Volkswagen’s Spanish division Seat announced temporary stoppages that could last for days or weeks.

On Monday, Volkswagen’s Autoeuropa car assembly plant near Lisbon said it had reduced its daily output by 16% because of a shortage of workers after Portugal ordered all schools closed amid the coronavirus outbreak.

VW also said on Sunday it was preparing to suspend operations at its manufacturing plant in Bratislava after Slovakia declared a state of emergency in response to the virus.

With all non-essential services closed, including car dealers, and people forced to stay at home except for strict working needs, many forecast a heavy fall in car sales in March.

FCA, which according to analyst estimates produces around 25% of its vehicles in Europe, said the suspensions through March 27 would allow it respond to interrupted market demand by optimising supply.

Marco Opipari, an analyst at Fidentiis, said a few weeks of closures were not a big problem in an over-supplied European auto industry, and lost production could be recovered later on.

“The real problem is on the demand side. People are not buying cars now, and sales volumes are expected to be very bad in March, with a real impact on automakers’ earnings,” he said.

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