Auto Plant Closures Reach as Far as South Africa, as Doubts Over Demand in 2020 Grow
A day after the big three Detroit automakers announced a deal with the UAW to suspend car production in the U.S. until the end of the month, while performing deep-cleaning of their facilities, other automakers are also taking steps in response to the COVID-19 outbreak, even in countries not seeing high numbers of recorded cases.
BMW announced it is suspending production at its plants in Europe in response to the COVID-19 pandemic, as well as in South Africa, which has reported only 116 confirmed cases nationwide. The automaker plans to stop production until April 19, and has also closed some dealerships in Europe.
“At the moment, for all of us, our first priority as a society is to overcome the corona pandemic and then to find our way back to normal life,” Oliver Zipse, Chairman of the Board of Management of BMW AG, said on Wednesday.
“In times like these, we need responsible behavior in society. We find ourselves in highly unusual times,” Zipse added. “All of us are personally affected. Medical experts and scientists are giving clear directions as to what we need to do to slow and contain the spread of the coronavirus pandemic. The next few weeks will be critical. Many countries have taken significant measures, which we support.”
The planned plant closures extend to other BMW Group brands: Rolls-Royce plans a four-week shutdown of its Goodwood, U.K. plant while Mini is suspending production at three U.K. plants until March 17.
French automaker PSA Group — Peugeot, Citroen, Opel and Vauxhall — has already shuttered its plants, with a shutdown planned to run until March 27. Renault has also closed its factories in France and Spain.
Brands in the Volkswagen Group, including Audi, SEAT and Skoda, also announced production halts earlier this week spanning several countries in Europe, but not extending to Volkswagen’s plant in Chattanooga, Tennessee for the time being.
Hyundai and Kia both have plants in Europe and plan to suspend production there for two weeks. Toyota and Nissan are doing the same with their European plants.
The main worry for automakers, aside from the unknown length of plant closures, is demand for new vehicles in April and beyond. The dates many automakers cite thus far are still dependent on decisions their respective governments made. So, while automakers are announcing factory restart dates right now, there is little guarantee there won’t be contrary orders by government authorities several weeks down the road. While component supply lines and pre-outbreak production might be back up to speed in late April, it does not mean that car customers will return to pre-outbreak buying habits during that time frame.
Dr. Nicolas Peter, Member of the Board of Management of BMW AG, admitted as much in a press conference on Wednesday, March 18 in Germany.
“The current uncertainty surrounding future worldwide developments impacted by the coronavirus makes it difficult to provide an accurate forecast for 2020,” Dr. Peter said. “According to the latest developments, our guidance for the full year assumes that the sales situation will deteriorate in all major markets. Here is the assumption that the sales situation in all markets will begin to normalize again after a few weeks. Possible longer-term impacts as a consequence of the spreading of the Corona virus and a resulting volatility of financial markets cannot currently be estimated and are therefore not included in our forecast.”
There’s also no guarantee that governments will lift various quarantine measures in April. We’ll keep you posted as we learn more.
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