Auto makers face more than $ 100 billion in revenue

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The shutdown of the auto industry in Europe and North America is expected to cost more than $ 100 billion in lost revenue if factories on both continents are closed until the end of April.

Lost European sales are expected to reach 2.6 million cars, worth € 66 billion, while in North America, they will reach 2 million cars, worth around $ 52 billion, if – as expected – the closings remain in effect for the rest of the month.

The calculations were made by Ian Henry, owner of the AutoAnalysis research group, and compiles vehicle output forecasts for the British Auto Industry Trade Association, SMMT.

Henry said that for each additional week, closing European sites would cost the industry an additional € 8 billion in lost production value. In North America, this figure could reach $ 7.5 billion.

All major European and North American factories are closed after automakers closed sites last month to protect workers and because of lower demand levels.

Many of the automakers’ initial estimates of reopenings expected in late March or April have since been abandoned, with several including Nissan, Ford and General Motors now saying the sites are closed “indefinitely”.

“I don’t see any semblance of normalcy coming back before May at the earliest,” Henry told The Financial Times.

Henry calculated expected production for each auto plant this year, taking into account new model launches and demand levels, then subtracted the number of days lost at shutdown.

The number of cars lost is then multiplied by the expected “ex-works price”, which is the price of the vehicle without fees or taxes from the dealer, for the final value lost.

The automakers have placed hundreds of thousands of workers in government salary plans and have contracted tens of billions of dollars in debt to help overcome the blockage of Covid-19.

General Motors and Ford have both drawn $ 16 billion and $ 15.4 billion from their lines of credit, while Daimler, in Germany, opened a new line of credit for 12 billion euros on Thursday in addition to its 11 billion euros existing.

Last week, Nissan placed all 6,000 production workers at its Sunderland plant on leave, where the British government pays 80% of their wages.

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The industry’s financial record remains unknown, although Volkswagen chief executive Herbert Diess said the German automaker was facing a $ 2 billion a week bill.

Car sales in Western Europe fell by around two-thirds last month, country-to-country data released so far, while car sales in the United States in March fell to their lowest level in 10 years.

Both markets expect further declines in April, with consumers facing weeks of blockage and dealers being forced to close.

While delayed car sales may return once the restrictions are lifted by European and US authorities, the state of the economy and employment levels are expected to reduce demand.

In China, car sales fell to almost nothing at one point. According to the latest sales figures available, car sales are now around 40% below levels before the closings.

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