Corona crisis hits German carmakers during crucial transition period

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The production stops and far-reaching sales collapse in the automotive industry is hitting Germany’s major carmakers at a crucial time of transition, Florian Gehm writes in Die Welt. Car sales are projected to drop by at least 20 percent globally this year and bailouts for stricken manufacturers and suppliers are set to cost the German government billions of euros, at a time when the industry is moving from traditional vehicle manufacturing to new technologies and evolving mobility concepts, according to CLEW.

“Some companies may well have to contemplate mergers,” Gehm says, arguing that revenue will be needed to prepare for the future of propulsion systems that allow avoiding EU fines for violating fleet emission limits. At the same time, German carmakers will also need to hold back billions of euros for looming lawsuits and fines in the context of the dieselgate emissions fraud scandal. “The industry won’t have time to heal its wounds once the corona crisis is over,” Gehm writes, adding that Volkswagen, Daimler, BMW and others are likely to be among those calling for help the loudest.

Germany’s carmakers and other major industries in the country have stopped production lines and factories throughout the country in a bid to protect workers and the wider public from a faster spread of the coronavirus. The crisis hits the companies at a time when the shift to electric cars already requires major reshuffling of capital and labour requirements. Due to the sector’s importance for the country’s entire economy, supporting the car industry’s transition to sustainable mobility has become a top priority for the German government.

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