Volkswagen, the world's largest carmaker by sales, is warning of huge layoffs if the COVID-19 pandemic isn't quickly brought under control. VW employs 671,000 people worldwide and sold 10.96 million motor vehicles in 2019. Passenger car sales have plunged 40% so far in March.
CEO Herbert Diess said VW still isn't making any sales outside China and is looking for ways to resume production elsewhere that won't endanger its employees by exposing them to COVID-19
"We need to rethink production," he said. "The discipline which we had in China we do not yet have at our German locations."
Like the World Health Organization (WHO), Diess believes the solution to the COVID-19 pandemic is to get this highly contagious disease under control as quickly as possible.
"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 noted.
He's glad demand in China is reviving as the country slowly emerges from the economic damage wrought by the disease but said production is only at half the level prior to the crisis.
VW's largest market is China, which accounts for 40% of its sales and profits. It operates 124 factories around the world of which 72 are in Europe, with 28 in Germany. It suspended production in Europe earlier this month because of COVID-19.
Diess pointed out VW is still spending more than $2.2 billion (€2 billion) a week despite is massive sales and production losses. These expenses have been going on for weeks.
As it ramps-up production in China, Volkswagen is experimenting on ways to resume manufacturing with workers maintaining safe distances from one another. Diess also said company employees are being encouraged to maintain hygiene and to disinfect.
VW announced a stop to production at all of its European factories on March 16. It has also closed its plants in the United States, Mexico, and other parts of the world.
Despite its dire straits, VW doesn't see it necessary to ask a bailout from the German government, said CFO Frank Witter. He said Volkswagen is sticking to its forecast of paying a dividend but is looking closely at all investment and spending needs.
Witter also said Volkswagen has yet to tap bank credit lines worth more than €20 billion and sees those facilities only as a back-up for the eventuality capital markets shut down.
VW also owns Audi, Bentley, Bugatti, Lamborghini, Porsche, Seat and Skoda. It also owns Ducati motorbikes, as well as MAN and Scania trucks.