Economy 17 March 2020, 5:58pm

Daimler announces two-week production stop at most European plants

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German carmaker Daimler has announced on Tuesday that due to the worsening situation of the COVID-19 pandemic, it is suspending production in the majority of its European plants, initially for two weeks. This is a precautionary measure to contain the spread of the coronavirus and protect the workforce, it said in a statement. Not all global supply chains can be maintained at present, it explained, adding that it is a proactive and proportionate decision to prepare for a temporarily decline in demand and to protect the company’s financial strength.

Due to the worsening situation of the COVID-19 pandemic, the Daimler Group has decided today to suspend the majority of its production in Europe, as well as work in selected administrative departments, for an initial period of two weeks.

By taking this action, the company is following the recommendations of international, national and local authorities.

THE SUSPENSION APPLIES TO DAIMLER’S CAR, VAN AND COMMERCIAL VEHICLE PLANTS IN EUROPE AND WILL START THIS WEEK.

At this point we don't know whether the measure will affect the Hungarian operation of the company, the Mercedes-Benz factory in Kecskemét, but we have a suspicion that it will.

Volkswagen Group CEO Herbert Diess has announced on Tuesday that they are going to suspend production this week at plants in Italy, Portugal, Slovakia and Spain. He added that VW is preparing to shut down the rest of its factories across Europe due to the spread of coronavirus. The Hungarian Audi plant in Győr (northwest Hungary) will also be affected, and production there is to be put on hold as of Monday (23 March).

The Hungarian operation of Japanese carmaker Suzuki has also scrapped the afternoon shift at its Esztergom-based plant (northern Hungary) and interns were sent home.

An assessment of global supply chains drove Daimler to the conclusion that these currently cannot be maintained to their full extent.

An extension of this measure will depend on further developments.

Wherever operations need to be continued, the company will take appropriate precautions to prevent the infection of its employees, it added.

The company stressed that with these closures, Daimler is helping to protect its workforce, to interrupt chains of infection and to contain the spread of the pandemic. At the same time, this will help the company to prepare for a period of temporarily lower demand and to protect its financial strength.

Given the ongoing spread of COVID-19, the economic effects on Daimler cannot be adequately determined or reliably quantified at this time.

Daimler’s management is monitoring the situation constantly and will take further measures as required. Full operations will be resumed when the situation improves.