How Coronavirus has Changed the European Car Industry

by SpeedLux
car industry plant

The coronavirus outbreak has had a major impact on the European automotive industry. Car manufacturers have shut down their factories all over the continent, and drop in the oil price has caused demand for electric cars to plummet. 

China has the world’s largest car industry, and the market fell by 80% already in February. Weeks before the coronavirus started, one of the most disastrous crises in Europe since WW2, it was clear that the car industry would be hit hard by the outbreak. 

Auto-Parts in Short Supply

The first blow to the car industry was a shortage of auto-parts, due to Chinese subcontractors shutting down production. This quickly caused global repercussions. European car producers were forced to shut down production due to lack of parts, and the industry claims it’s nearly impossible to predict revenue due to the ongoing outbreak. 

German auto-parts maker Continental AG reported more than 40% of their plants have shut down. About half of their workforce, some 30.000 employees, are temporarily laid off. 

Shutdown in European Factories and Stores

Due to closed factories, more than 1 million employees are temporarily or permanently laid off in the European car industry, and these numbers only reflect the ones who work directly with car manufacturing. The car industry as a whole provides jobs for almost 14 million Europeans, including showrooms, service centres and mechanics, and administrations. How many of these are temporarily laid off at the moment, is not known. 

There are a total of 229 factories producing cars and car parts in Europe. As a result of the closed factories, production is 1.2 million cars behind schedule. How long and extensive the shutdown will be is uncertain. In 2018, annual car production was approximately 16 million cars. 

Plummet in Sales

French passenger car registration dropped 72% in March compared to the previous year, and The Spanish new car registration fell by 69%. This is below the worst levels of the financial crisis.

Carmakers from Volkswagen, PSA Group, and Fiat Chrysler to Renault have closed down factories and showrooms after public life was restricted to stem the spread of COVID-19. With people housebound and non-essential purchases prohibited in countries like Italy, consumers simply aren’t buying new vehicles. 

Tesla Hit Hard

Tesla brought home all their American employees from Germany early on, causing Tesla production in Europe to stop. Tesla was planning to start producing cars in Europe next summer, but now plans are on hold indefinitely. 

Drop in the global oil price caused demand for electric vehicles to drop massively. As a result, Tesla-stock fell dramatically, along with the rest of the marked. 

In mid-March, Elon Musk announced plans to start production of ventilators, using medical equipment, car parts, and technology from Tesla and SpaceX. Ventilators are critical for patients enduring the most extreme respiratory effects of the virus and are in short demand worldwide. 

How many ventilators Tesla and SpaceX have actually produced and delivered, are unclear. However, several car producers and other entrepreneur companies such as Apple have announced their contribution to the ongoing pandemic, using advanced technology to produce medical equipment. 

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