investments in the automotive industry in Latin America are halted

The pandemic hits hard. Since cars are not sold, they are not produced either and that means that hundreds of thousands of people are out of work

As a consequence of the coronavirus, the automotive industry suffered a strong brake that will have important consequences throughout the sector’s value chain. Since cars are not sold, they are not produced either, and that means that hundreds of thousands of people are out of work.

The president of Volkswagen in Latin America, Pablo Di Si, spoke about the effects of the coronavirus in the automotive industry in a virtual interview with the Brazilian media Automotive Business.

“It is not time to talk about strategies, but survival for May, June and July,” said Di Si.

The highest authority of the German brand at the regional level announced that the project to manufacture a new model in Brazil, for which Volkswagen would invest millions of dollars, is “frozen”. He warned that it is not canceled, but it is fully braked. “We will have time to continue with our product strategy,” he said.

Say Si did not give specifications on the frozen plan, but is known to have referred to Project A00. From it will emerge the successor to the Volkswagen Gol, one of the best-selling cars in Latin America and the historical leader of its segment in Argentina. A very high sales volume was expected from this.

“In four months we are going to spend a lot of money, the equivalent of three or four years of an investment plan,” Di Si warned during the conversation. “We have zero profit and a very high fixed cost,” he added.

In this line, he said that “the biggest problem will be for suppliers and dealers.” “We are currently analyzing how to resolve your situation. We do not have months to do it. We have days.”

Regarding the return to activity, he said that the automakers “will begin to produce according to demand.” “We cannot start producing, accumulate stock and then go out to burst it. We have to be super careful with stock and balance market demand with production.”

Beyond this, he announced that they will not resort to staff layoffs to get out of this crisis, although he warned that it is impossible not to resort to a regime of temporary suspensions.

Find out the latest on digital economy, startups, fintech, corporate innovation and blockchain. CLICK HERE