Cars and COVID-19: From shutdown to slow recovery

At German premium carmaker Daimler, net profit fell 78% in the first quarter, bleeding the company's cash position down to a meager €617 million ($662 million). Securing liquidity has top priority now, says CFO Harald Wilhelm, as he throws out guidance for the year. Slumping demand, struggling parts supply and a difficult restart of production makes any outlook impossible, he says.

Daimler's trucks business has been hit especially hard in the first three months of 2020, with sales slumping 20% compared with the same period last year. The company's luxury brand, Mercedes-Benz, also suffered a decline — down by 15% even though global showrooms and factories had remained open until March.

The complete halt of production at Daimler lasted four weeks, with about 80% of its 170,000 employees being out of work and sustaining themselves through Germany's short-time work scheme. Although factories have been opening since Monday (April 20), most staff will remain dependent on the state-funded wage compensation until the end of April.

Chinese autoworkers, like those at Honda's Dongfeng plant (pictured), have already resumed work, hoping for sales in the world's largest car market to pick up again. While in February car sales in China collapsed by 80%, there was light at the end of the tunnel in March with declines slowing to 48%. Meanwhile, all of Daimler's production plants in the country are back in operation.

The world's largest carmaker by sales, Volkswagen, has reopened its factory in Zwickau, Germany, pressing ahead with the production of its ID.3 electric car. Despite a 5-week work stoppage at the plant, VW says efforts to roll out the pivotal mass-market electric vehicle this summer are still on time. Engine production at VW's Chemnitz plant though is only gradually being scaled up.

VW's largest production facility in Wolfsburg, Germany, however will remain shuttered at least until Monday (April 27). So will its plants in Emden and Hanover. Security protocols, including heavy-duty disinfecting and cleaning, will be put in place, says VW. Where social distancing measures aren't possible, workers are obliged to wear face masks.

At Renault in France, the coronavirus-induced shutdown has led to a massive drop in revenue, down by 20% on a decline in unit sales of more than a quarter. The slump has been hemorrhaging the company's cash reserves by about a third, but that still leaves €10.3 billion in Renault's coffers.

French carmaker PSA, including the Peugeot, Citroen and Opel brands, saw its first-quarter unit sales even more clobbered than those of its national rival. It sold a staggering 627,000 vehicles less than a year before, down 29%. So far, PSA has not given any date for reopening its European plants, citing ongoing talks with labor unions about pandemic security precautions.

In Italy, one of the worst-hit EU country in the current pandemic, the complete shutdown of all industries will not be relaxed before May 4. So the country's top carmaker, Fiat Chrysler, will continue to suffer enormous losses, already amounting to 76% fewer cars sold in March. By comparison, Europe-wide auto sales slumped by "only" 55% on average during the month.