Fiat Chrysler Suspends Operations in Europe Due To Coronavirus

Fiat Chrysler Suspends Operations in Europe Due To Coronavirus

  • Fiat Chrysler announced its plan to halt operations for two weeks in Europe to protect staff from the pandemic
  • Experts forecast a heavy decline in car sales for this month
  • The company said the suspension would help it move on with operations once the market demand returns

Fiat Chrysler Automobiles (NYSE:FCAU) said it will suspend operations for two weeks at most of its plants in Europe to help protect employees from the fast-spreading coronavirus, after a sharp fall in demand.

Italy has suffered the biggest blow by the pandemic among European countries, and the first to impose a nationwide lockdown. Not long after, Spain has enforced the lockdown too, as well as France.

Experts estimate a sharp fall in car sales this month, as most of the non-essential services halted operations, including car dealers.

The Italian-American carmaker said it “is working with its supply base and business partners to be ready to enable our manufacturing operations to deliver previously planned total levels of production despite the suspension when market demand returns.”

Yesterday, Italy reported 368 deaths over the previous 24 hours, amounting to a total death toll of 1,809. FCA’s shares dropped almost 16% after the announcement. Carmaker’s stock plunged 47% this year.

An analyst at Madrid-based brokerage firm Fidentiis, Marco Opipari, said a couple of weeks of suspension shouldn’t cause major issues in an over-supplied European car industry, adding the losses could be recovered in the future.

“The real problem is on the demand side, people are not buying cars now, and sales volumes are expected to be very bad in March, with a real impact on automakers’ earnings,” Opipari said.

Fiat’s closed plants include Melfi, Pomigliano, Cassino, Mirafiori, Grugliasco, and Modena in Italy, Kragujevac in Serbia and Tychy in Poland.

Carmakers shutting down plants in Europe is a good indicator of how the pandemic has impacted the auto industry on a global level. The virus has already caused a vast majority of Chinese factories to close, as well as a sharp drop in car sales.

FCA said the suspension would help it to continue operating once the market conditions change in their favour.

Ferrari (BIT:RACE) also closed two of its plants last week until March 27, while the automotive brake systems manufacturer Brembo (BIT:BRE), a company that collaborates with Maserati, also announced the closure of four of its Italian plants.

By Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to Invezz. His passion has given him first hand experience of trading, while his writing means he understands the market forces and wider regulation.

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