Europe restarts car factories amid uncertain demand

German carmaking giant Volkswagen resumed production at its biggest factory on Monday as part of a broader industry drive to get back to work in Europe, where the coronavirus pandemic has hammered demand and pushed up inventory levels.

Encouraged by a fall in infection rates, Germany has eased lockdown rules and automakers are relying on the country’s ability to trace and contain new coronavirus cases to safely restore operations in Europe’s largest economy.

Volkswagen group, which also owns the Skoda, Audi, Bentley, Porsche and Seat brands, is resuming production at its plant in Wolfsburg, Germany, as well as at factories in Portugal, Spain, Russia, South Africa, and the Czech Republic this week.

Production capacity at Wolfsburg will be just 10%-15% to begin with, and will reach around 40% of pre-crisis levels after about a week, Andreas Tostmann, the VW brand’s board member responsible for production, told Reuters.

“The restart of Europe’s biggest car factory after weeks of standstill is an important symbol for our employees, our dealers, suppliers, the German economy and for Europe,” he said.

Volkswagen’s plans mirror moves by rivals Renault, Peugeot and Fiat Chrysler to revive an industry crippled by dealership lockdowns and supply bottlenecks caused by restrictions to contain the pandemic.

Fiat Chrysler has restarted Italian production at its plant in Atessa, and has begun preparatory work in Cassino, Pomigliano, Termoli, and Mirafiori.