- China is the only active car market in the world, CEO Diess warns
- Without a financial injection, VW will be forced to cut jobs
- CFO Witter urges ECB to expedite purchases of short-term debt
Herbert Diess, CEO of Volkswagen AG (ETR: VOW), has said that the German car giant is burning through 2 billion euros a week amid the halted production. Without an intervention, Volkswagen may cut jobs, warns Diess.
“We need to rethink production. The discipline which we had in China we do not yet have at our German locations,” he said.
Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.
“Only if we, like China, Korea or other Asian states, get the problem under control then we have a chance to come through the crisis without job losses. It requires a very sharp intervention,” Diess said.
The car giant is looking at ways to restart production and not endanger its staff, Diess said, before adding that Volkswagen is not selling anywhere in the world, except for China, where demand is starting to pick up.
“We are not making sales or revenues outside of China,” Diess, adding that Volkswagen still had to cover a high level of fixed costs of “around 2 billion euros a week”, he told TV channel ZDF late on Thursday.
Volkswagen’s Chief Financial Officer Frank Witter has urged the ECB to accelerate purchases of short-term debt. It is still unclear whether ECB plans to purchase commercial papers, which would obviously benefit Volkswagen, as one of Europe’s most regular corporate issuers of commercial paper.
“There’s a lot of pressure on the incoming money flow,” said Witter. “We have different diversified funding sources available but not all of them are as liquid as they were.”
Volkswagen prefers the issuance of commercial paper to credits. The Wolfsburg-based car giant has access to more than 20 billion euros in credit lines.
On the other hand, VW has the capacity to issue 20 billion euros in commercial paper. According to Witter, Volkswagen doesn’t plan to ask the German government for help.
Volkswagen employs more than 670,000 people globally in 124 factories, out of which half are in Europe. It is the world’s biggest carmaker by sales as it owns brands such as Audi, Bentley, Bugatti, Lamborghini, Porsche, Seat and Skoda.