Hyundai, Audi, Renault restart European production

Some signs of normalcy are starting to return to the automotive industry, as Bloomberg reports that Hyundai, Audi and Renault are all restarting production in Europe, following mass shutdowns resulting from the coronavirus pandemic.

The Korean carmaker reopened its Nošovice factory in Czech Republic on Tuesday following a three-week shutdown, according to local news agency CTK. Production will be ramped up gradually, with only two out of three shifts currently active.

The night shift period is instead being used to disinfect the factory, and disinfection will also occur several times a day, said spokesman Pavel Barvik. Restarting production will involve a total of 12,000 people within the region – 3,300 directly under the employ of Hyundai, 8,700 from direct suppliers.

Audi also resumed operations at its engine plant in Györ, Hungary. Around 100 employees are working on one assembly line in a single shift, and Bloomberg says the company plans to add a second line by the end of the week, with vehicle production in Hungary also possibly resuming by the end of next week. “The company is doing everything to safeguard the health of employees,” Audi said in a statement.

While shutdowns continue across the group, parent company Volkswagen has kept some components operations running in Germany, in order to safeguard parts supplies to China where the industry continues to recover. Wolfsburg currently has 1,700 employees working in five sites.

Meanwhile, a spokesperson at Renault confirmed that the company has restarted a portion of its operations in Portugal and plans to partially resume Romanian production on April 21, Russian operations having gradually returned on Monday.

Factories across Europe have shut down and sales halted after governments enacted isolation measures to control the pandemic, which has had a severe impact on manufacturers. Bloomberg Intelligence analyst Michael Dean estimates European vehicle sales to be slashed by as much as three million units this year, amounting to a €60 billion (RM284 billion) loss in revenue.

While governments and companies are now working out ways to end the shut downs, efforts to restart the economy are likely to be gradual and could still be affected if the virus resurges. German chancellor Angela Merkel discussed possible steps to ease restrictions with state leaders yesterday, expected to influence how quickly carmakers like Daimler and BMW can reopen plants.

Hampering plans to reboot Europe’s massive industrial network is its complexity, with supply chains closely intertwined across regions. Travel restrictions are expected to remain for some time and the number of infections is still relatively high in some areas of the continent. Bloomberg says that industry executives have warned against restarting operations hastily and called for a coordinated approach in Europe.

This won’t be easy, as measures to curb the pandemic vary from country to country. While slowing new infections have prompted Austria, Denmark and now Germany to ease restrictions, France has just extended its lockdown by another month, with the United Kingdom likely to follow suit.

Even if production resumes, it’s still not clear when showrooms will reopen or if consumer demand will be there. German car data provider DAT said the effect of last month’s halting on sales on dealers will increase the longer it goes on, adding that a car loses €28 (RM130) in value on average each day. This means that a dealer with an inventory of 300 vehicles would have already lost €235,200 (RM1.1 million).

Tags: COVID-19

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