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2020-04-27

After shutdown of coronavirus, VW re-starts Europe's largest car factory

Image:-car factory

VW (VOWG p. DE), the world's largest sales carmaker, resumed work at its largest factory in Wolfsburg, Germany on Monday, even as stock levels across the industry continue to build up as demand for coronavirus pandemic saps continues.

Encouraged by a drop in infection rates, Germany has eased lockdown rules and carmakers rely on the ability of the country to trace and contain the coronavirus to bring back Europe's largest economy to work.

The Volkswagen Group, which owns the brands Skoda, Audi, Bentley, Porsche and Seat, is also rebooting production this week in Portugal, Spain, Russia, South Africa, the Czech Republic and South America.

Renault (RENA.PA), Peugeot (PEUP.PA) and FiatChrysler (FCHA.MI) move their plans mirror.

On Monday, FiatChrysler will open its Sevel plant in central Italy with plans to resume production at a rate ranging from 70% to 80%.

Hyundai Motor Co (005380.KS) ramped up domestic production after South Korea got a grip on the coronavirus, only to find that its cars were sitting in U.S. ports due to a severe hit from the pandemic due to global demand.

In Wolfsburg, on Monday, around 8,000 workers began again building cars, including the VW Golf. 1,400 cars are being built this week, followed by 6,000 cars in a fortnight, VW said.

Production capacity at the Wolfsburg plant will start at around 10 per cent -15 per cent and reach around 40 per cent of pre-crisis levels in the week after, said Andreas Tostmann, VW's manufacturing board member, Reuters.

"After weeks of standstill, restarting Europe's biggest car factory is an important symbol for our employees, our dealers, suppliers, the German economy and for Europe," Tostmann said.

VW has been revising its procedures to include additional hygiene measures. Workers are told to measure their temperature at home and be changed into their overalls, to avoid crowding in changing rooms at the factory.

Additional markings have been placed on the factory floor so that workers can adhere better to a 1.5-meter social distance rule and extra time is provided so that employees can disinfect their tools and surfaces, VW said.

Volkswagen began manufacturing components in early April in Braunschweig, Kassel, Salzgitter and Hanover and resumed manufacturing of cars in Zwickau and Bratislava on 20 April and in Chemnitz on 23 April.

Volkswagen plans to restart production in the United States at Chattanooga from May 3.

Volkswagen is still working to whittle down pre-crisis inventory levels, the carmaker has said. As public life resumes in many parts of Europe it is pegging its hopes on rekindled demand.

Volkswagen said it had reopened around 70 per cent of its dealerships in Germany as of last week.