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VW is burning through $2.2B a week as virus halts production

2K views 16 replies 9 participants last post by  Neanderthal 
#1 ·

Demand in China is picking up again but production is only at half the level prior to the crisis, Diess said



FRANKFURT -- Volkswagen Group may have to cut jobs if the coronavirus pandemic is not brought under control as the automaker is still spending about 2 billion euros ($2.2 billion) a week, CEO Herbert Diess told German TV channel ZDF.

VW is not making any sales outside of China and is looking for ways to resume production elsewhere that wouldn't endanger its staff, Diess told the Markus Lanz talk show on Thursday.

"We are not making sales or revenues outside of China," Diess said, adding that VW still had to cover a high level of fixed costs of "around 2 billion euros a week."

"We need to rethink production. We do not yet have the discipline that we had in China at our German locations," he said. "Only if we, like China, Korea or other Asian states, get the problem under control then we have a chance to come through the crisis without job losses. It requires a very sharp intervention," Diess said.

Demand in China is picking up again but production is only at half the level prior to the crisis, he said.
The automaker working on ways to resume manufacturing with workers maintaining safe distances from one another, including by stepping up hygiene and disinfecting, Diess said.

VW employs 671,000 people and has 124 factories around the world of which 72 are in Europe, with 28 in Germany alone. It suspended production in Europe earlier this month because of the pandemic.

Refinancing pressure
VW's Chief Financial Officer, Frank Witter, called on the European Central Bank (ECB) to accelerate purchases of short-term debt, the Financial Times reported on Friday.

He said the ECB should send "clear signals" and purchase the short-term debt, which often matures in as little as six or nine months, "as soon as possible."

The ECB said last week it would prop up markets, including through the purchase of commercial paper, as part of a 750 billion euro plan to boost asset purchases to contain the financial fallout from coronavirus.

It remains unclear whether the ECB has started buying commercial paper. VW is one of Europe's most regular corporate issuers of commercial paper.

"There's a lot of pressure on the incoming money flow," said Witter. "We have different diversified funding sources available but not all of them are as liquid as they were."

VW has the capacity to issue up to 15 billon euros of commercial paper under its main funding program, with another 5 billion euros earmarked for short-term debt in Belgium.

The company's ringfenced financial services division has a separate commercial paper program with a 2.5 billion euro limit.
Witter said Volkswagen, which has yet to tap bank credit lines worth in excess of 20 billion euros, considered those facilities only as a back-up for when capital markets are shut.

In a separate interview with German paper Boersen-Zeitung, Witter said VW did not see the need to tap state aid to weather the crisis.

VW passenger car sales were down 40 percent in March, Witter told the newspaper, adding that the company was reviewing whether its annual meeting could take place on May 7.

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#4 ·
Unless they can contain the spread of the virus, lock downs will increase until and after it peaks.
You only have to see what happened with Spanish flu to realise what happens when folks think
that they've beaten the bug, let down their guard and the numbers climbed to a second higher peak.
 
#16 · (Edited)
The Germans won’t allow VW to go bankrupt, some deal will be done to make amends for dieselgate and new super tough emissions regs,

This will be a case of the EU trying to be tough just as most of their manufacturers have been possibly mortally wounded by vivid-19. The choice is simple protect Europe’s car industry or kill it while it’s on its knees. The Germans, the French and Italians aren’t that stupid.
 
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