The government of Giuseppe Conte has announced the details of the long-awaited "Phase 2" which presents "loose links" in some sectors to counter the coronavirus emergency. Thus, following the indications of the task force led by Vittorio Colao, the executive prepared a decree which foresees, starting from 4 May, the reopening of all factories, including cars and vehicles in general.
One of the statements made by the prime minister will remain etched in our memories: "In the coming months we must lay the foundations for the restart of the country ... this country does not start again without businesses".
THE CRISIS OF THE AUTOMOTIVE SECTOR IN ITALY
The automotive industry wasn't expecting anything else after the long period of lockdown, which has generated evident dramatic consequences, for example, in the collapse of registrations of both new and used vehicles, perhaps triggering, according to industry analysts, an epochal crisis for the entire automotive market. As for the four-wheeler sector, there are equally difficult forecasts, so that expectations of recovery appear even more difficult and translated in statistical terms confirm today a 60% drop in the national market on an annual basis. To underline it was Adolfo De Stefani Cosentino, president of Federauto, the Federation of car dealers, after carefully studying the estimates that emerged from the registrations of the month of March 2020 (-86% compared to March 2019), also distributed by the Ministry of Infrastructure and Transport.
To make his voice heard was also AsConAuto (National Association of Car Dealership Consortia), which did not fail to point out that government aid should soon be made known for a sector that guarantees 11% of the country's GDP (according to estimates Quintegia) and who kept the relationship with the customer open by providing the necessary assistance to private means but also and above all to those at the service of the national health emergency. Thus strengthens his thinking the president of AsConAuto, Fabrizio Guido: “Today, in the face of the tragedy that has hit the country, the road becomes even more difficult. But the process undertaken, the strength expressed by the people of our network and the successes achieved so far, push us to have courage and strengthen our energies in continuing a path fraught with new difficulties: only together can we do it. For this reason, we trust that the government will be able to listen to requests coming from the automotive supply chain. Verified and concrete proposals that will allow a sector, which represents such a significant part of the GDP, to continue to work professionally and generate profits thanks to the widespread activities throughout the territory ".
THE CRISIS OF THE AUTOMOTIVE SECTOR IN EUROPE
The coronavirus is leaving wounds open to European registrations too, with a -52% in March and with an overview of the markets that sees Italy black jersey between the EU countries, the EFTA countries and the United Kingdom. The lockdown worked against the pandemic, which now seems to be moving to the automotive sector, which in Europe will struggle to reactivate its liveliness. It is normal to imagine that in a recovery phase anyone who wants to return to his habits, to his normal life, made up of circumstances that the pandemic has changed, so the manufacturers know that it is probably due to a lack of will or economic possibility, many will not make the race in the dealers when everything returns to the "first life". Everyone agrees that, for this to happen, there is a need for a jolt, a wave of new proposals that the market will be able to communicate to eligible customers, which is why the automotive supply chain awaits proposals from governments which, faced with gruesome numbers, simply have raised his hands and shook his head positively.
Let's get to the point: in March 2020 in the thirty European countries just 853.077 cars were sold, 918.000 fewer than 1.771.030 units in March 2019 (in this month more than 1,2 million vehicles have already come out in the European factories compared to the same period of last year) with such a situation in the 5 most important European markets: Italy -85%, France -72%, Spain - 69%, UK -44%, Germany -38%.
UNRAE (National Union of Foreign Automotive Representatives) has already warned all operators in the sector, why at the end of 2020 the slowdown of the European market will stop around 30%, with a final -20% of France, -25% of Great Britain and an even worse -32% / - 46% of Italy, a country where greater uncertainty reigns. In short, we will have to roll up our sleeves and get busy, also because UNRAE always remembers that the automotive industry in Europe every year generates a commercial surplus of 85 billion and invests about sixty in research and development, offering work to 14 million people. , of which 2,6 million are employed in production.
THE CRISIS OF THE AUTOMOTIVE SECTOR IN THE WORLD
The International Automobile Manufacturers Organization (Oica) has also sounded the alarm about the consequences that Covid-19 is inflicting on the global industry of the sector, which already last year had recorded a -5% in world production (dropped to 91,8 million vehicles), confirming the worst of the last ten years in which the automotive industry had recorded continuous growth. The coronavirus began to spread only a few months ago, but it has already put the automotive industry on a global alert which is facing a challenge that has never been so difficult. It was also remembered by the Oica president, Fu Binfeng, according to which this may be long "The worst crisis the automotive industry has ever had." In fact, it must be remembered that the first negative impact on the sector we are analyzing occurred in January with the arrest of most of the Chinese industry, which not only produces cars but which on its own land contributes to the creation of an infinite quantity of useful components for all manufacturers in the realization of their cars; to follow, of course and as we all know, the complete closure of most of the plants of the automotive industry and its suppliers around the world took place.
EUROPE REACTS TO THE CRISIS
The tragic situation facing the auto market has reached the top floors of political Europe, so a few days ago the Vice-President of the European Commission, Frans Timmermans, stated that the sector needs decisive and substantial aid, also thanks to incentives for scrapping in the face of the purchase of green cars or in any case with the latest generation of engines capable of complying with the restrictive emissions rules decided in Europe: "It is good for the automotive industry, it is good for employment and it is good for the environment", stressed Timmermans. The incentives, after all, would also help to solve the problem of a circulating park that in some countries is quite dated, helping those who are about to buy a new car to come across a slightly more reasonable price list.
Frans Timmermans explains his idea thus: “The auto industry is asking us for help to support families to buy a new car. Why not do it with ecological scrapping incentive systems, which allow you to replace an old and polluting car with a cleaner one, even with zero emissions? "
Europe's political thinking has thus also embraced the cry for support by ACEA, the European association of car manufacturers: "A renewal program of the fleet circulating at European level would be necessary for all categories of vehicles, in order to boost the demand for vehicles equipped with the latest technologies"; were the statements of Mike Manley, CEO of FCA, but president of the association since December last year.
Not even the German automotive sector has escaped the discussion, so the VDA (Verband der Automobilindustrie), analogous to what for us is Anfia (National Association of the automotive industry chain), asked that Europe be united in deciding on the right and therefore effective support measures for the sector in crisis: "Member States facing financial difficulties due to the coronavirus crisis need solidarity from other EU countries, especially those from southern and eastern Europe" for all European countries to enjoy "Stable economic conditions, of crucial importance for companies in the sector". In addition to financial support, the VDA asked for a careful study of the best solutions to be implemented in the phase of recovery of economic activities and reopening of borders: "In particular, borders must be as permeable as possible for the transport of goods: there is no other way to solve the current problems in supply chains".
Solidarity yes, but also so much need to have an Italy that is back in full swing, without which even the German car manufacturers would continue their suffering production. The speech linked to the primary role that our country plays in the components behind every German car clearly returns. As everyone knows, our supply chain deals with "everything and more", from the smallest screws, nuts and bolts to the motors, passing through the sheet metal and components of brakes, brakes, engines, gearboxes and wheels. In a period like this, it stands out even more to the attention (even of the least attentive) that Germany is the first country for export destination by our producers with a share that is worth 21% (total export) and a earnings of 5 billion euros.
VOLKSWAGEN AND AUDI GROUP
The German Group is reopening the plants, a little at a time, doing it in Zwickau (where it makes ID.3, soon to debut), in Bratislava and will continue with the plants in Russia, the United States, South Africa and in Mexico, but the satisfaction remains partial in the Volkswagen Group offices and they were the ones to communicate it. A few days ago, the Volkswagen board of directors made it known that due to the current circumstances that have developed with the spread of the coronavirus, the prospects for the entire year 2020, already presented in the "Annual Report 2019", can no longer be respected and it is also not possible to formulate new forecasts for the current year: "The impacts of the pandemic on customer demand, the supply chain and production cannot be accurately predicted."
The Teutonic Group had expected to achieve the same result as last year as a target for global vehicle deliveries, with revenue growth of up to 4% and an operating margin between 6,5% and 7,5%. The plans have clearly been turned upside down and the numbers that the Volkswagen Group has made known to date are already in line with the stormy 2020 that the automotive sector will face. The first quarter of the current year represented an 8% drop compared to the same period of 2019, with an operating profit of 900 million euros (against 3,9 billion a year earlier) and with a return on margin sales of about 1,6%. Net cash flow was negative for 2,5 billion euros while net liquidity dropped to 17,8 billion euros in the face of 21,3 billion at the end of 2019.
Same fate for Audi, Volkswagen subsidiary, which along the same lines as the "parent company" has taken a big step back on the forecasts for 2020, explaining that "It is currently impossible to provide estimates because of the consequences of the coronavirus pandemic, which has had a significant impact on the group's activities." This resulted in a stall which translated into a drop in demand and "bottlenecks in supplies" which led to the stop of production.
According to preliminary data for the first quarter, Audi expects sales of around € 12,5 billion, an operating profit of € 15 million and a return on sales margin of around 0,1%, thus arguing the historical moment: "The turbulence on the financial and commodity markets led to a negative impact on fair value and negative effects on currencies, which weighed on the results for the first quarter by 0,5 billion euros". Audi has also made it known what the priorities of the business will be during the course of the year: "As can be seen from the positive developments in China, an economic recovery over the year is possible", while on the reduction of costs and the safeguarding of liquidity sees it as "A priority thing together with the optimization of working capital and the definition of priorities in investments in key areas".
PSA-FCA: WHAT DEVELOPMENTS?
It has not been long (18 December 2019) since PSA and FCA officially announced their willingness to create the merger between the groups, which would give birth to the fourth largest manufacturer in the world. Given the conditions in which we find ourselves, four months do not seem so many, yet some important voice that has cast doubt on the feasibility of the "marriage" between the two already great automotive companies has taken place, enough to provoke the immediate reaction of Carlos Tavares, CEO of PSA, who immediately announced that the working groups are speeding up to conclude the agreement. Let's put together the peculiarities of the new "fourth world force": will be based in the Netherlands and will be listed on the Paris, Milan and New York stock exchanges; the company will have a board of directors consisting of 11 members, five appointed by FCA and five by PSA. The Board will "seat" two members representing FCA and Groupe PSA workers.
Carlos Tavares will be CEO and member of the Board of Directors for an initial five-year term, while the presidency will go to John Elkann, current FCA president. From a production point of view, more than two thirds of the fully operational volumes will be concentrated on two platforms, with annual volumes of approximately 3 million vehicles on both the small and compact / mid-size platforms and no one is expected to close establishment.
The future would seem more than rosy; for example, if we put together what was produced by the two groups in 2018 (year before the announcement of the merger) it could not be otherwise: the new company would have annual sales of 8,7 million vehicles, with revenues of almost 170 billion Euros, a current operating profit of over 11 billion euros and an operating margin of 6,6%. Furthermore, as confirmed by the two realities, the fourth world force will have "Iconic and highly complementary brands covering all the main segments from luxury to premium, from mainstream passenger vehicles to SUVs, trucks and light commercial vehicles" (here are all the "home" brands: on one side Fiat, Chrysler, Alfa Romeo, Jeep, Abarth, Lancia, Maserati and Dodge, on the other Peugeot, Citroën, DS, Opel, Vauxhall). It does not end here, because in the geopolitics of the global market the new company will be able to show its strength in several continents with a good 46% of the revenues generated in Europe and an equally strong 43% in North America.
What will happen now? The freezing of the "works" at present will not diminish the strength of the Group that will be, but it is clear that the parties in question, sealed the desire to give life to the "marriage", will have their thoughts, including the need to be able to dispose enough cash to face production and commercial difficulties and last but not least keep an eye on the stock exchange value of the stock, which for PSA has fallen by more than 30% and for FCA it has almost halved.
PLEASE NOTE
Before closing this article, we waited for the anticipated picture of the prospect of the Italian market in April which, alas, is likely to be truly dramatic. According to UNRAE forecasts, new car registrations will drop by 97%; up to Friday 24 April 2.073 units were sold, compared to over 175.000 units in the same month in 2019. The president of UNRAE, Michele Crisci he stated that “There is a need for unprecedented action by the government, in support of the distribution chain, which has suddenly seen its revenues go down for 2 months now. Thousands of companies are at risk of survival as well as the 160.000 employees and their families who would suffer heavy repercussions ". We summarize in points the latest proposals that UNRAE has submitted to the Government.
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Introduce a third range of cars that can benefit from the Ecobonus, with emissions between 61 and 95 g / km of CO2 and increase the unit amounts of the range between 21 and 60 g / km until 2021
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Suspension of the Ecotax for 2020
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Bonus stock (combinable with Ecobonus), to facilitate the restart of the market (only for 2020)
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Tax realignment to the standards of other EU countries on new company vehicles, with 100% VAT deductibility and an increase in the deductible cost ceiling up to 50.000 Euros
"It is also crucial - also reads in the UNRAE note - that, in view of the start of the announced Phase 2 of the recovery of economic activities and in compliance with the safety protocols for employees and customers, the reopening of the dealerships from next Monday, provided for by the Prime Minister's Decree signed by the Prime Minister, is accompanied by the approval within this week of the proposals, so that they are enabled to benefit from the possible restart of the market, with a positive impact also on GDP and tax revenues, to which the automotive sector contributes so much ”.
Photo: Mercedes-Benz Italy Press Office
