Volkswagen’s CEO Herbert Diess has announced that in the interest of public health and safety the European brand will suspend production of its vehicles amid the COVID-19 pandemic. The decision to halt production will not only affect Volkswagen but the companies under it as well. Being the world’s largest automaker this will have an effect on the global automotive market as other countries are still safe from the pandemic and are business as usual.
Plants in Spain, Portugal, and Italy have already suspended their operations, with other plants in Germany and in other European countries to follow suit. The suspension of production will last for about two to three weeks but in light of the current situation, these are subject to change.
Given the present significant deterioration in the sales situation and the heightened uncertainty regarding parts and supplies to our plants. Production is to be suspended in the near future at factories operated by Group brands.
The German automaker was hit hard when the outbreak started as China was the first country to be hit by the virus. During the first few weeks of the pandemic production came to a grinding halt but now that it has subsided in China production is beginning to slowly ramp back up again. Authorities in the country have already taken dramatic actions to stem the spread of the virus. 31 of 33 Volkswagen factories have already resumed production in the country.
In the US many of the plants that the German brand has are still operating, although these are being closely monitored by executives with the goal in mind to adjust production schedules.
How does this affect the Philippines?
The effects of the shut down do not affect the Philippines as much. Volkswagen units sold locally are not sourced from European countries and as such do not have a big impact on the supply to the Philippines. The country is also in a state of enhanced community quarantine which means that buying a car is probably the last thing in the minds of the public leading to lower car demand.
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