Abu Dhabi, UAESaturday 30 May 2020

Volkswagen's production shutdown costs $2.2bn per week, chief executive says

The automaker is confident to roll-out its ID.3 electric car this summer as planned

Ghana is aiming to attract global firms like Volkswagen to set up operations in the country.  Reuters
Ghana is aiming to attract global firms like Volkswagen to set up operations in the country.  Reuters

Volkswagen’s unprecedented move to halt output on both sides of the Atlantic costs the world’s largest automaker $2.2 billion (Dh8.07bn) per week, and chief executive Herbert Diess said decisive action is critical to overcome the coronavirus pandemic.

Sales outside China have effectively come to a standstill, while demand in the country, the company’s largest single market, has clawed back to about 50 per cent of pre-crisis levels, Mr Diess told German broadcaster ZDF during a panel discussion this week.

Volkswagen can endure the factory shutdowns in Europe and the Americas “for several weeks, maybe months, but not indefinitely,” Mr Diess said.

The company is in a strong financial position, but he didn’t rule out “structural measures” if the crisis drags on for many months or even years in a worst-case scenario.

In a separate interview, chief financial officer Frank Witter said that, as things stand, Volkswagen won’t need financial support from the German government, beyond tapping into cash for employees on short-time work.

“Seen from today’s perspective, I rule that out,” Mr Witter told Boersen-Zeitung newspaper on Friday. “In the car unit, we have strong cash flow and decent net liquidity.”

Mr Witter flagged what he called a “significant network of confirmed, partly syndicated credit lines” of more than $33.9bn. “Using these instruments, we should have the strength to get through the corona crisis and maintain liquidity at the necessary level,” Mr Witter said.

Mr Diess stressed that strict discipline in following medical advice is key to fighting the spread of the virus and said Volkswagen is already preparing to resume operations. These efforts include intensified sanitary measures and ensuring more distance between employees in work spaces.

He is “confident” Volkswagen can roll-out its important ID.3 electric car this summer as planned but said that business conditions overall remain difficult to predict.

Updated: March 27, 2020 06:44 PM

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