Shutting down production in response to Covid-19 has cost VW $2.2 billion a week.
Life as we know it has changed during the ongoing coronavirus pandemic. The auto industry was hit particularly hard, as major manufacturers were forced to shut down production around the world. Shortly after the new Golf GTI was revealed, Volkswagen suspended production at its Wolfsburg plant in Germany on March 18. Considering this is costing Volkswagen a whopping $2.2 billion per week, the situation is far from ideal.
To reduce these huge financial losses, Volkswagen is slowly resuming production at the plant as of today, albeit with a very limited production capacity. Unsurprisingly, the first car resuming production is the Volkswagen Golf since it's the company's best-selling model. Production of the Golf will recommence on a one-shift basis with reduced capacity and longer cycle times. VW also confirmed that around 8,000 employees are returning to the production halls.
After the Golf, production of the Volkswagen Tiguan and Touran models as well as the Seat Tarraco will begin on Wednesday. Multi-shift operation will then be underway the following week if everything goes according to plan. Around 2,600 suppliers, most of which are located in Germany, have resumed production for Volkswagen's main plant.
"Step-by-step resumption of production is an important signal for the workforce, dealerships, suppliers, and the wider economy. In terms of managing the crisis, though, this is just the first step. Additional momentum is needed to stimulate demand in Germany and throughout Europe so that production volumes can be successively increased," said Ralf Brandstatter, Chief Operating Officer of Volkswagen Passenger Cars.
Volkswagen expects to build around 1,400 vehicles by the end of the first week of production at the Wolfsburg plant. Production will then ramp up to more than 6,000 vehicles the following week as multi-shift operation recommences, but that still only represents 40 percent of the production capacity before the Covid-19 crisis. As a precaution to protect workers, washrooms and team rooms are being cleaned more frequently and several hundred additional handwashing facilities are being installed throughout the plant.
In addition, 70 percent of Volkswagen dealerships in Germany have already reopened. After Zwickau, Wolfsburg is the second VW plant to reopen after production was halted last month. Production in Bratislava, Slovakia, also resumed last week, but Volkswagen's US plants remain closed at the time of writing.