The situation in the Czech automotive industry

Published: 19.03.2020 Related countries:  Israel Israel

Impacts of the current pandemic on car production in the Czech Republic

Although ŠKODA AUTO reported a year-on-year increase in revenues of 14.5% to EUR 19.8 billion in 2019, the consequences of the coronavirus crisis hit hard on it . The initially excellent result was partly supported by the initial consolidation following the assumption of regional responsibility for India. Operating profit increased by EUR 300 million to EUR 1.7 billion. Higher sales volumes and optimization or pricing measures more than compensated the negative effects of increased costs for new products. Operating profitability of sales was 8.4%. A year earlier it was 8.0%.
Due to the current difficult situation, ŠKODA AUTO discontinued production on Wednesday, March 18. The automaker confirmed that production is to resume on Monday, April 6, 2020. Employees will receive 70% salary, then from March 30 - 75%. The Volkswagen Group said it would close its business for two to three weeks as a result of the pandemic.
On March 12, 2020, Hyundai Motor began production of the Kona Electric at its Hyundai Motor Manufacturing Czech (HMMC). This week, the first cars produced for the European markets were dispatched from the factory and headed for customers in Europe.
Hyundai's Noshovice plant could stop for 14 days due to the spread of the new coronavirus COVID-19. The unions asked for this the management of the company on 16 March, 2020. Employees would remain in quarantine at home while production was stopped. Production interruption is demanded by employees who are ready to cover production failure after the situation calms down.
The Czech TPCA plant (producing small Toyota, Peugeot and Citroen cars) has stopped production since 18 March.
Production interruptions can affect the entire automotive production chain.
The Automotive Industry Association (AutoSAP) monitors significant disruption of international supply chains, very difficult logistics conditions and significant planning difficulties. The export volume of Czech supplier companies (AutoSAP members) is around CZK 350bn per year, accounting for about 40% of total exports. According to the association, production attenuation will cause huge losses to companies. However, the manufacturers' decision to restrict activity seems to be inevitable to stop the spread of the disease. AutoSAP believes that the industry will return to normal pace once the current emergency has subsided.


Prepared by the team of CzechTrade / CzechInvest Israel