With slowing demand for new cars and disruptions in supply chain, the Volkswagen Group may be extending the plant closure in Germany as the Covid-19 coronavirus continues wreaking havoc in global markets. As it is, CEO Herbert Diess said the manufacturing disruptions are costing the firm about 2 billion euros (RM9.65 billion) a week, according to Automotive News Europe.

Diess told the Markus Lanz talk show last week that the company is not making sales or revenues outside of China, adding that the billions of euros it’s burning through is used to cover a high level of fixed costs.

“We need to rethink production. We do not yet have the discipline that we had in China at our German locations. 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.

As provinces in China begin easing travel restrictions, demand for cars have started picking up again, but Diess said production is only at half the level prior to the pandemic. The automaker is currently exploring ways to resume production with workers distancing themselves, and it also plans to step up hygiene and disinfecting protocols. So far, none of its employees in China have been infected with Covid-19.

Volkswagen has 671,000 employees under its payroll and has 124 factories around the world, 72 of which are in Europe, and 28 of those are in Germany. It had already applied for short-time work for 80,000 of its employees in Germany, a move which would save costs as the bulk of the staffs’ salaries are issued by the state. For now, the plant closure in Germany is extended to April 9.

VW production chief, Andreas Tostmann said: “The health of our employees has the highest priority. We will ensure that they can return to safe workplaces when production and logistics activities are resumed. In this context, we are also incorporating our experience in China where almost all our plants have now resumed production and the market seems to be gradually returning to normal.”

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