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VW re-starts Europe’s largest car factory after coronavirus shutdown

VW re-starts Europe's largest car factory after coronavirus shutdown 1

FRANKFURT (Reuters) – VW (VOWG_p.DE) the world’s largest carmaker by sales, resumed work at its biggest factory in Wolfsburg, Germany, on Monday even as inventory levels across the industry continue to build up as the coronavirus pandemic saps demand.

A worker wears a protective mask at the Volkswagen assembly line after VW re-starts Europe’s largest car factory after coronavirus shutdown in Wolfsburg, Germany, April 27, 2020, as the spread of the coronavirus disease (COVID-19) continues. Swen Pfoertner/Pool via REUTERS

Encouraged by a fall in infection rates, Germany eased lockdown rules and carmakers are relying on the country’s ability to trace and contain the coronavirus to put Europe’s largest economy back to work.

Volkswagen Group, which owns the Skoda, Audi, Bentley, Porsche and Seat brands, is also re-starting production in Portugal, Spain, Russia, South Africa, the Czech Republic and South America this week.

Its plans mirror moves by rivals Renault (RENA.PA), Peugeot (PEUP.PA) and FiatChrysler (FCHA.MI).

FiatChrysler will open its Sevel plant in central Italy on Monday, with plans to resume production at a rate of between 70%-80%.

Hyundai Motor Co (005380.KS) ramped up domestic production after South Korea got a grip on the coronavirus, only to find that its cars were sitting in U.S. ports because global demand has taken a severe hit due to the pandemic.

In Wolfsburg, around 8,000 workers started building cars again on Monday, including the VW Golf. This week 1,400 cars will be built, followed by 6,000 cars in a fortnight, VW said.

Production capacity in the Wolfsburg plant will be at around 10%-15% to begin with, and reach around 40% of pre-crisis levels in the week after, Andreas Tostmann, VW brand’s board member responsible for production, told Reuters.

“The restart of Europe’s biggest car factory after weeks of standstill is an important symbol for our employees, our dealers, suppliers, the German economy and for Europe,” Tostmann said.

VW has overhauled its procedures to include extra hygiene measures. Workers are told to measure their temperature and to get changed into their overalls at home, to prevent crowding in factory changing rooms.

Extra markings have been put on the factory floor so that workers are better able to adhere to a 1.5 metre social distancing rule, and extra time is provided so that employees can disinfect their tools and surfaces, VW said.

Volkswagen began producing components in Braunschweig, Kassel, Salzgitter and Hanover in early April and resumed car manufacturing in Zwickau and Bratislava on April 20 and in Chemnitz on April 23.

From May 3 Volkswagen plans to restart production in Chattanooga in the United States.

Volkswagen is still working to whittle down inventory levels from before the crisis, the carmaker said. It is pegging its hopes on rekindled demand as public life resumes in many parts of Europe.

Volkswagen said that around 70% of its dealerships in Germany had re-opened as of last week.

Reporting by Jan Schwartz and Edward Taylor; editing by Kirsten Donovan and Jason Neely

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