Saturday, June 6, 2020
News The Costs Of The Coronavirus Are Mounting In The Auto Industry

The Costs Of The Coronavirus Are Mounting In The Auto Industry

Salary cuts, job losses, controlling spending in the wake of plummeting sales is forcing OEMs to take drastic measures.

  • GM and Ford cut salaries.

  • Volkswagen burns through $2.2 billion a week.

  • Many manufacturers are looking into various measures to survive financially.


With the possible exception of China, assembly lines and factories around the globe, from all makes, are currently idled and shut down. This is in direct response to the threat of the continued threat posed by the coronavirus which has kept car buyers away from showrooms and from making transactions. As carmakers face dwindling revenues and fixed costs, actions must be taken in order to survive.

GM has decided to implement salary cuts for nearly 70,000 workers starting this week. The reduction will be in the amount of 20% but the good news is that GM promises the sums will be repaid, with interest, no later than March 15th, 2021. Executives will also see their cash compensations cut by 5-10%. 6,500 employees have been sent home on temporary leave with 75% of their regular pay.

Ford announced that its top 300 executives will defer between 20% and 50% of their salaries for the next five months, at the very least. In order to help curb the cash bleeding, Ford wants to restart the production of the Ford F-150 on April 14th, which is their most profitable product.

Volkswagen, which employs 671,000 people and runs 124 factories around the world (72 in Europe, 28 in Germany) is looking into ways to revamp production by, among other measures, stepping up hygiene and disinfecting. Currently, they carry 2 billion euros a week in fixed costs which are not offset sales even if demand is slowly picking in China once more.

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Matt St-Pierre
Matt St-Pierre
Trained as an Automotive Technician, Matt has two decades of automotive journalism under his belt. He’s done TV, radio, print and this thing called the internet. He’s an avid collector of many 4-wheeled things, all of them under 1,400 kg, holds a recently expired racing license and is a father of two. Life is beautiful. Send Matt an emai

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