UK Business NewsUK Headlines

Shutdown of car manufacturers expected to cost more than $100bn

The prolonged closure of car manufacturers across Europe and North America will end up costing the auto industry over $100bn (£82bn) in lost income if the lockdowns last until the end of the month.

All major carmakers have suspended production due to the disruption and increased safety regulations caused by the spread of the outbreak.

If these measures remain in place until the end of April as expected, this will account for $66bn (£54bn) in lost car sales in Europe, equal to 2.6 million cars. In North America, this will account for 2 million cars with an estimated value of $52bn (£42bn).

The calculations have been made by Ian Henry, the owner of the consultancy AutoAnalysis, who produces forecasts for the industry body, the Society of Motor Manufacturers and Traders (SMMT).

Assembly lines ground to a halt in March as the lockdown across Europe disrupted global supply chains, and analysts predicted large falls in demand in all key markets.

All volume manufacturers from BMW to Toyota and Nissan to Jaguar Land Rover sent their workers home after the worsening outbreak on the continent led companies to examine the health implications for their workers.

The story was repeated across North America as the Detroit carmakers, including General Motors, Ford and Fiat Chrysler, shut down their plants.

Auto firms initially closed their sites for a number of weeks, saying they would keep the situation under review, but the shutdown is anticipated to last longer than first expected.

Henry predicts that each additional week of plant closures in Europe will cost the industry an extra $8bn (£7bn) in lost production value and similarly $7.5bn (£6bn) in North America.