Author: Esteve

In stark contrast to the situation in China, where the new coronavirus is well under control, the epidemic in Europe is spreading rapidly, posing a serious challenge to governments. This is a serious test for governments. As of March 19, 2020, Italy had 4,207 new cases and more than 35,000 confirmed cases, making the country a real disaster area in Europe.

Some European countries, in addition to asking China for help, have been forced to follow China's lead, especially in advising residents to quarantine themselves at home as a way to minimize the spread of the virus.

In Italy, the hardest-hit region, on the one hand, people have already begun home isolation measures to minimize outdoor activities; but on the other hand, it is precisely because of the reduction in the movement of people, the impact of commercial activities began to appear, and the first to bear the brunt of the automotive industry.

Logistics industry laid to rest

Just a week ago, the British economic and business consulting firm LMC?Automotive predicted that Europe's third-largest economy, Italy's car sales, could see a decline of more than 15 percent in 2020.

Italy's car sales could shrink dramatically

The report from Reuters describes the current situation in Italy as one in which normal life has virtually ceased and economic activity has been relegated to the provision of basic services, as the government hopes to stop the spread of the "new crown virus.

Also last week, Prime Minister Giuseppe Conte said he had ordered stores in Italy to close on their own, especially restaurants, cafes and bars. But later, perhaps out of concern for the economy, Conte added that "factories can continue to operate with appropriate protective measures."

The "privileges" imposed on the plant were in fact an attempt to minimize business losses in an industry as intensive as automobile manufacturing, where a shutdown of the assembly line often means that the whole body, including upstream and downstream industries, is affected.

Previously, a shortage of parts from China had already led to the shutdown of the Fiat 500L, and now the widespread factory shutdowns that Europeans hate to see are really happening.

But a look at the Italian auto market shows that even in February, when the impact of the epidemic wasn't too great, sales were already down: new-car sales fell 5.9 percent in January, 8.8 percent in February, and it seems uncertain how much they'll fall in March.

The Italian Association of Foreign Automobile Dealers (UNRAE) has released a forecast showing that 1.91 million new cars will be sold across the country in 2019, while 2020 could see sales of just 1.5 million for the year, due to the New Crown virus. It's already mid-March, and looking at the rate at which the virus is currently spreading in Italy, it's expected that it will probably take a couple of months for the outbreak to be brought under control, meaning that sales expectations for the first half of the year are pretty much out of the window.

With Italy already in this situation, what's the situation in the rest of Europe?

France's auto industry hits pause button

Although France's current "new crown" outbreak isn't serious, the number of people infected is also trending upward.

On March 19, the country reported 1,404 new cases, with the cumulative number of confirmed cases soon to exceed 10,000, according to the French media. In this context, the French media could not help but lament that Covid-19 (as the new coronavirus is commonly called by the European media, distinguishing it from China's 2019-nCoV) has already had far-reaching effects on drivers, including the automotive industry, a state of affairs experienced in China, and that we are not sufficiently surprised ......

Crude oil trading way down

There are 40 million motorists on the register in France, according to the French Automobile Manufacturers' Association (CCFA), and most of them have expressed concerns about traveling in groups. Despite the concerns, sources also point out that at least 80% of people across France have no travel restrictions. The source noted that 60% of people now prefer to drive themselves.

A data provided by BlaBlaCar, a carpooling software in France, showed that the business that initially saw a decline in travelers was mainly a decline in carpooling to Italy, but now carpooling trips are declining throughout Western Europe. In France, in particular, only 15 percent of carpool trips are running.

On the other hand, France has also seen a dive in oil prices due to the drop in global crude oil trading prices, which French media say have returned to early 2016 levels. When the global crude oil trading price fell to $33 a barrel in early March, the price of refined oil products (of which 61% is tax) in the French market followed up with adjustments, with 95# E10 gasoline quoted at €1.44/liter and 0# diesel at €1.36/liter.

Recent average oil prices in France

But rather surprisingly, the drop in oil prices has not been accompanied by an increase in the volume of refined products traded, with less than 3% growth compared to the same period in 2019. This is partly due to the recent outbreak of the new coronavirus in France, and partly due to the impact of the transport strikes caused by the "yellow vests" in 2019, which seem to be getting used to public **** transportation.

However, it was the car dealership system that was most affected in France during the outbreak. In addition to fewer customers arriving at stores, fewer new cars were sold.

Eric Champarnaud, founder of Autoways, a French motorhome sales company, said, "French car sales in 2019 were 2.21 million, and we expect a 3.8 percent decline in 2020, to about 2.13 million. But if the epidemic gets worse, sales below 2 million units this year are possible. "

But at the same time Champano also said that if everyone stays out of the house or if they don't take public **** transportation, then a subsequent rebound in car sales could also be possible.

Currently in France, the motor vehicle license test has been postponed indefinitely, announced on March 16, along with the motorcycle license test. And in a bid to curb the spread of the virus, French Prime Minister Edouard Philippe (?douard?Philippe), like the Italian leader, has announced tough controls - closing important public ****ing places, but keeping things like kiosks, banks and pharmacies open.

And in the car manufacturing sector, PSA Group has announced the closure of all its French plants, with the rest of the European region closed until March 27 before deciding whether to return to work depending on the situation. Renault Group has opened a telecommuting mode, in the Renault e-mail sent to employees, except in special circumstances or to ensure business continuity, has prohibited employees from traveling.

In addition, Renault's factories in Valladolid and Palencia, Spain, have also been shut down for a short period of time recently, mainly due to a shortage of parts. Spain is currently the second most severely affected country in Europe by the epidemic outside of Italy, and the outlook for Spain's automotive manufacturing sector is not good at the moment, given the epidemic's long spreading cycle.

German manufacturers temporarily shut down to avoid risk

European auto sales have entered a difficult period due to the slowdown in global economic growth, the introduction of the WLTP test rules, the automotive excise tax, and the outbreak of the "new crown virus. February car sales figures for Europe show that new car sales have fallen 7.2 percent year-on-year to 1.067 million units.

In fact, after slipping 7.4 percent in January, the European car market hit another Waterloo in February. The decline in March is expected to be potentially even worse due to the closure of public **** places in several European countries. And comparing data from previous years, the first quarter of 2020 is in its worst shape since 2013.

From the information released by the Association of European Manufacturers (ACEA), the EU's main market sales fell for the second consecutive month. Country-by-country, it's "green", as is the stock market these days - down 11 percent in Germany, 8.8 percent in Italy, 2.9 percent in the U.K., 2.7 percent in France, and 6 percent in Spain.

And in Germany, including Volkswagen, Audi, BMW and Mercedes-Benz have been hedging their bets against the risks posed by the virus by closing factories.

Back on March 17, Volkswagen Group Chief Executive Herbert?Diess issued a message saying, "In view of the current serious deterioration in the sales situation and the growing uncertainty about the supply of parts to our factories, production will next be suspended at the Group's plants for all brands."

In fact, the Volkswagen Group has already suspended production at its plants in Italy, Portugal, Slovakia and Spain since the beginning of this week. And currently, due to the more severe epidemic in Europe, the VW Group is also considering shutting down plant operations in other European regions. That's because earlier VW's labor unions suggested the shutdown was ultimately recommended due to the inability to keep workers at a safe distance from each other.

Audi's new Q5 is built in Mexico

The Volkswagen Group currently has 124 production sites around the world, involving its brands including Lamborghini, Audi, Seat, Skoda and others, 72 of which are in Europe, and as many as 28 in Germany.

Audi, for example, has said it will stop production at its lair Ingolstadt and Neckarsulm plants, plus due to problems in the parts supply chain Audi's plant in Mexico, which is currently building the new Q5, is shutting down as of March 16.

And Seat's plant in Mathorel, Spain, will be shuttered, with the launch of its newest MQB platform-based all-new Leon will be affected in subsequent new car deliveries.

Tesla's German gigafactory is being logged and leveled

The VW Group's finances have also been warned because of the successive shutdowns of factories around the world. Frank Witter, the executive in charge of finance, revealed at a recent press conference that sales in China, which slumped 74 percent in February, are slowly recovering, and that first-quarter profits could take a nosedive because of potentially lackluster European sales in March.

In the new energy sector, Tesla's current German Superfactory project is also in an awkward position. As President Donald?Trump has announced a 30-day European travel restriction starting March 20, it has essentially disrupted Tesla boss Elon?Musk's schedule.

Under Musk's planning, he had planned to have the factory in Germany up and running within two years, and the 4 billion euro project was previously still under construction despite being blocked by German environmental advocates. According to the current impact of the new crown virus, Tesla's German super factory may be delayed, which will also lead to a delay in the delivery of the European version of the Model?Y.

Munich-based BMW Group, in addition to temporarily shutting down its factory, has also made adjustments to some of its dealership operations. BMW CEO Oliver?Zipse later issued a statement in which he said BMW took responsibility for all decisions while ensuring the health of its employees and a balanced bottom line.

And Zipse also said in all sincerity that BMW has abandoned plans to exceed 2019 sales and is forecasting that sales may be lower than the same period in 2019.

BMW's decision to close plants also affects MINI and Rolls-Royce in the UK. MINI's three plants in particular will be shut down until April 17, with a decision on whether to return to work made on a case-by-case basis.

In addition to the aforementioned automakers, Mercedes-Benz has also decided to suspend production in Europe for two weeks. Since Mercedes-Benz is a full-field automaker, the suspension affects both commercial and passenger vehicles.

In fact, the suspension of production by European manufacturers also signals that the epidemic in the region has reached the peak of the outbreak, and with the global stock market crash, the launch of WLTP in Europe, the electrification transition and many other factors, this year is not a good year for European automakers.

To use a popular word of the moment, it's time for European automakers to "**** off".END

This article was written by the author of Automotive Home, and does not represent the viewpoint of Automotive Home.