VW hit by €2bn-a-week cash drain

Volkswagen consumes around € 2 billion in cash per week, the world’s largest automaker has revealed, as plant closings in Europe and the Americas push the auto industry into the worst recession in decades.

Manufacturers and suppliers around the world are fighting for additional credit, with Fiat Chrysler obtaining an additional 3.5 billion euros, while VW, one of Europe’s largest employers, has urged the Central Bank to buy short-term commercial debt to help it overcome the Coronavirus pandemic.

The German group has already put almost a third of its 300,000 workers in the country on reduced hours, counting on the Berlin government to close the gap.

The French manufacturer Renault, whose sales have almost been interrupted, has raised the possibility of requesting public loans, although President Jean-Dominique Senard has rejected the idea of ​​nationalization.

“We are cutting costs as much as possible, delaying non-critical projects and we can survive a few weeks or months, but not indefinitely,” said Herbert Diess, CEO of VW, at the German TV channel ZDF.

“We have no sales, we have no income outside of China,” he added, “while we also have to pay fixed costs.”

Diess’s warning comes as Moody’s predicted a 14% drop in global auto sales in 2020, more than five times the drop it originally anticipated when the effects of the spread of Covid-19 became apparent in February.

The forecast paints a much worse picture than even the 2008 financial crisis, which caused the auto market to drop about 8% over two years.

The rating agency also investigated Thursday 14 major European auto parts manufacturers, including German Schaeffler and French Valeo, because of what it described as “a severe and widespread credit shock Further complicating many manufacturers’ plans to resume production in April.

According to Bloomberg, Daimler, which has put the majority of its 170,000 employees in Germany on reduced hours, is also seeking € 10 billion in additional credit from banks. The company declined to comment.

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