Volkswagen’s European Operations Suspended As Coronavirus Threat Looms Large

German auto giant, Volkswagen, is readying itself to halt production until further notice across Europe as the region is struggling heavily to contain the Coronavirus pandemic. The company announced that operations at production facilities at Spain, Portugal, and Slovakia will be suspended this week.

Volkswagen’s European Operations Suspended As Coronavirus Threat Looms Large

The group's factories in Italy that manufacture Lamborghini cars and Ducati motorcycles will also be locked down. VW's other German and European facilities will halt production for about two weeks.

Volkswagen’s European Operations Suspended As Coronavirus Threat Looms Large

The company says that the current deterioration in sales coupled with uncertainty around supply of parts to production facilities has resulted in a decision of suspending production across Europe. The company is also suspending production at their Wolfsburg facility - one of the largest manufacturing plants world over.

Volkswagen’s European Operations Suspended As Coronavirus Threat Looms Large

The Germany based manufacturer, that owns brands including Skoda, Audi, Porsche, and Bugatti, among others, delivered a collective of 10.8 million vehicles during 2019, more than any other manufacturer.

Volkswagen’s European Operations Suspended As Coronavirus Threat Looms Large

VW is the latest automaker in Europe to suspend production as a result of Coronavirus. Fiat Chrysler, the PSA Group, and Renault recently announced a closure of 35 manufacturing facilities (collective) across Europe.

Volkswagen’s European Operations Suspended As Coronavirus Threat Looms Large

Toyota, the world's second largest auto manufacturer after Volkswagen, also announced a closure of its production facilities at France and Portugal.

Volkswagen’s European Operations Suspended As Coronavirus Threat Looms Large

Volkswagen currently owns and operates one production facility in India. Based at Chakan near Pune, the facility currently employs 3,500 people and has a production capacity of 2 lakh vehicles a year. As is, the company has no plans of suspending production in the country.

Volkswagen’s European Operations Suspended As Coronavirus Threat Looms Large

According to the European Automobile Manufacturers Association, the suspension of manufacturing facilities has put close to 14 million direct and indirect jobs at risk. The shutdown as a result of Coronavirus has brought uncertainty to the European manufacturing industry.

Volkswagen’s European Operations Suspended As Coronavirus Threat Looms Large

Volkswagen said it was uncertain about how severely and for how long the ongoing pandemic would affect the company, and that is impossible to make any forecasts given the current circumstances.

Volkswagen’s European Operations Suspended As Coronavirus Threat Looms Large

Thoughts About Volkswagen Suspending Production Facilities Across Europe

While this is a good move to contain Coronavirus, the economic consequences cannot be neglected. Closing facilities across Europe will put pressure on the German economy and in turn across Europe which is most certainly headed towards a recession. What effect these closures will bring to India remains to be seen.

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Article Published On: Wednesday, March 18, 2020, 11:00 [IST]
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