VW calls for state aid

The VW supervisory board chairman warns of corporate bankruptcies in the supplier industry – and urges more government aid, for example for the expansion of the charging infrastructure.

VW supervisory board chairman Hans Dieter Pötsch

VAgainst the background of rising corona infections across Europe, Volkswagen is demanding more state aid for the automotive industry. The chairman of the supervisory board of the world’s largest car manufacturer, Hans Dieter Pötsch, called the current environment on Tuesday “more than worrying”. A second large-scale closure (lockdown) must urgently be prevented. He expects politicians to “prepare for a further deterioration in the economic framework”. He hopes that she will “prepare early for the coming autumn and winter”.

It is becoming critical for some small and medium-sized providers, especially among suppliers. “The pressure to act is increasing to prevent bankruptcies,” said Pötsch. The easiest way to do this is to improve the automaker’s production and sales. This was also the topic of a video conference with top politicians from the federal and state levels with the automotive industry on Tuesday.

With this in mind, he made specific proposals such as expanding the charging infrastructure for electric vehicles or promoting sales of modern, environmentally friendly trucks and buses. He brought into play improved depreciation of machines or commercial vehicles on the part of buyers.

In case customer trust comes back

Pötsch said that politicians had to review ongoing programs for their effectiveness and take appropriate action. Funds whose money is not called should be reallocated and made available to those in high demand, which is the case for the promotion of electric vehicles, for example. “If necessary, new measures must be decided in order to cope with this exceptional situation,” said Pötsch. Last but not least, he is placing his hopes on the EU Corona Fund, which contains money for innovations.

The important thing is to “robustly position” the economy and the automotive industry that supports it, said the Austrian, who is also President of the German-Austrian Chamber of Commerce. Pötsch praised the extension of the short-time allowance as an example. That goes a long way towards dampening people’s worries about the economic consequences of the pandemic.

He sees these concerns as the reason for the latent reluctance to buy from which companies such as VW are currently suffering in the mass segment. While business with fleet operators and also in the upper private customer segment has stabilized and is almost at the pre-Corona level, demand remains subdued in other areas. The capacity utilization is “beyond 80 percent”, but this is not sufficient in view of the high capital intensity of the business. That is why you need “very good capacity utilization in order to get back to a reasonable income situation”.

On the other hand, the camps are sometimes so empty that VW will “run a whole series of extra shifts in the rest of the year”. He also assumes that the proportion of short-time work can be further reduced. However, the result from the time before Corona will not be achieved until 2022 at the earliest, and possibly not until 2023 – if customer trust comes back.