COVID-19 continues to cause economic mayhem.
Like all automakers and other industries, Volkswagen is facing extremely challenging times due to the coronavirus pandemic. Factories have been idled across the globe and employees are either out of the job or have to work from home. Nothing is the same as it was only a few weeks ago. And through it all, the pandemic is costing Volkswagen billions of dollars. How much?
VW Group CEO Herbert Diess said the company continues to spend about $2.2 billion a week, according to a Reuters report via German TV channel ZDF. Without production and sales at full capacity, some difficult decisions lie ahead. "We are not making sales or revenues outside of China," Diess said. Meanwhile, VW still has to cover fixed costs of "around 2 billion euros a week." What can be done?
"We need to rethink production. We do not yet have the discipline that we had in China at our German locations," he said. "Only if we, like China, Korea or other Asian states, et the problem under control then we have a chance to come through the crisis without job losses. It requires a very sharp intervention," Diess said.
Furthermore, while China production has restarted, it's only at about half the level it was prior to the COVID-19 outbreak. If VW continues to spend at this weekly rate without earning sufficient income, job cuts will be inevitable. Currently, the automaker employs 671,000 people worldwide and has a total of 124 factories scattered throughout the world, and 28 are located in Germany.
VW's chief financial officer, Frank Witter, also confirmed passenger car sales for the month of March have so far been down by 40 percent. This comes at a time when vehicles like the updated VW Atlas and new VW Atlas Cross Sport are just about to arrive in yet another vital market, North America.
The automaker has already had to delay the official reveal of the ID.4, originally slated for the New York Auto Show. Although that event will now take place in August instead of April, VW's ID.4 debut plans remain unknown.