Published on April 16th, 2020 | by Steve Hanley0
Volkswagen Has A Plan To Restart Production, Restates 2020 Financial Guidance
April 16th, 2020 by Steve Hanley
Many of us have had this scary experience. We are gliding down the highway when all of a sudden, every warning light on the dashboard starts blinking, chimes start going off, the steering wheel becomes hard to turn, and the brakes stop working. The car comes to a stop on the side of the road wrapped in a cloud of steam — dead.
That is approximately what has happened to the global auto industry thanks to the coronavirus pandemic. Factories have been idled, supply chains have been ripped apart, and people who should be producing automobiles are sitting home watching re-runs of “Lost In Space.”
Volkswagen was in the middle of ramping up production of its ID.3 electric car — the first in a series of EVs built on the company’s innovative MEB platform for battery electric cars — when COVID-19 hit the fan. Now it has begun to pick itself up, dust itself off, and start all over again. In a recent press release, it says it restarted production at its factories in Brunswick and Kassel on April 6, followed by the components factories in Salzgitter, Chemnitz, and Hanover, and in Poland on April 14.
Next, it plans to restart limited production of automobiles at its factories in Zwickau, Germany and Bratislavia, Slovakia on April 20 while bringing overseas factories in Portugal, Spain, Russia, and the US back online starting April 27. The rest of its worldwide operations should be back in operation in early May.
Thomas Schmall, head of the components group for Volkswagen, says “The step-by-step reopening of our plants was important in order to safeguard supplies to overseas locations. Now we need to restart the entire production network while taking comprehensive protective measures and to supply all the vehicle plants of the various brands with components. The same high requirements for the health protection of our employees apply to all our plants.”
It’s all well and good to start getting back to normal. The trick is not to do it in a way that puts people at risk of infection. Volkswagen has created a 100-step plan to keep that from happening, starting with disinfecting its factories and continuing with worker safety protection.
Andreas Tostmann, head of production and logistics, says, “We are resuming production and logistics with a staged approach in a well organized way. The health of our employees has the highest priority. We are providing safe workplaces and the maximum possible level of health protection with a 100-point plan. In full awareness of our responsibility, we are ensuring that the economy regains momentum and cars once again leave the plants and reach our dealers and customers.”
The procedures have been trialed at the company’s factories in China, where 32 out of 33 have now reopened. To date, no new coronavirus infections have been reported.
Herbert & Thomas Have An Excellent ID.3 Adventure
In a post on LinkedIn, Volkswagen CEO Herbert Diess tells of a 1,200-kilometer road trip taken recently by VW board member Thomas Ulbrich. “My new working week starts together with Thomas Ulbrich at the wheel of a Volkswagen ID.3 – our most important project to meet the European CO2-targets in 2020 and 2021.
“The Corona Pandemic is a challenge for Sales and Production — but also for our Research & Development. We are fighting hard to keep our timeline for the launches to come. In R&D we are now working in two separate teams: morning and afternoon. We wear masks, keep our distance and follow high hygiene standards. Many meetings are now video conferences.
“And we are making progress: Thomas just had a test drive over 1200 kilometres with several fast charging stops and was very happy with the performance of the ID.3.”
Sharp-eyed readers will notice the head of Volkswagen is not scared of showing himself wearing a face mask — something the leader of the free world refuses to do.
Volkswagen Downgrades 2020 Guidance
It goes without saying that the coronavirus is taking a sledgehammer to the manufacturing sector. As a result, any financial forecasts from the beginning of the year have now gone out the window. In another press release, the company says,
“Due to the current developments, the Executive Board of Volkswagen AG assumes for now that the full year outlook for 2020, which was published with the 2019 Annual Report, can no longer be achieved. It is currently not possible to determine when a new outlook can be made for the full year. The impacts resulting from the pandemic on customer demand, the supply chain and production cannot currently be accurately forecasted.”
That’s not surprising, since new car sales have plunged more than 50% in recent weeks. The question now is, when will sales return to normal? And the answer is, nobody knows.
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