Analysis: Cars will be vital in the wider economic fightback

Volkswagen sales boss Jürgen Stackmann has said the car industry can be a “powerful engine” to help kick-start the European economy following the coronavirus crisis.

Stackmann said the interconnected nature of car making means that resuming production will have a major economic benefit in Europe. But he cautioned that sales incentive schemes focused purely on electric cars, which are being considered in some countries, wouldn’t have enough impact.

Wide-ranging lockdowns to tackle the spread of Covid-19 in Europe caused the industry to grind to a virtual standstill for nearly two months, with production halted and car sales plummeting as dealerships were forced to close.

“Coronavirus will have a deep and lasting effect on the automotive industry around the world,” said Stackmann, “and in the long term, it will change the way we do business forever.”

He added that the sudden nature of the lockdown restrictions made the crisis highly unusual. “When we’ve been through a crisis before, there’s always been an underlying strength, but this was like going from a full sprint to a sudden stop,” he said.

Although Volkswagen has resumed limited production at factories across Europe, it has already had to suspend lines because of limited demand.

Stackmann said: “The car industry is in a difficult position, but we consider it as instrumental to getting European industry restarted.

“The automotive industry is so interconnected that when we start up at scale, it will pull in a lot of other manufacturing companies in other sectors across Europe.

“Volkswagen normally produces 55,000 cars per week. At the moment, our output is 27,000. We don’t go full throttle with production just yet, because we need the sales system to be running at parallel speed first. We need to start by boosting sales and then use that to fire up the industrial engine of Europe.”