Fiat Chrysler suspends production at most plants in Europe

Production at most of Fiat Chrysler Automobiles' (FCA) European factories has been halted for at least two weeks to help protect staff against the coronavirus pandemic and adjust to a drop in demand. The company has said that Fiat and Maserati production would be halted until March 27 at the Italian facilities of Melfi, Pomigliano, Cassino, Mirafiori, Grugliasco and Modena.

FCA plants in Tychy, Poland and Kragujevac, Serbia will also be halted, the automotive firm has said.

In a statement, FCA said: "The temporary suspension enables the group to effectively respond to the interruption in market demand by ensuring the optimisation of supply." 

The pause in production will help FCA to resume activity when market conditions allow it, the company added. 

"The group 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." 

More 65% of FCA's European production takes place at its factories in Italy, and 18% of worldwide production, according to Philippe Houchois, an analyst at Jefferies autos. The production halt is down to a combination of staff shortages and disruption to supply chains of components.

Marco Opipari, an analyst at Fidentiis, commented that the losses coming from a few weeks of closures was something that could be later recovered in an over-supplied European automotive industry. 

"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," he said.

Analysts are forecasting a heavy drop in car sales in March with many non-essential services closed and people forced to stay home except for work needs.

The move by FCA follows a decision by Ferrari to close its two Italian plants until March 27, citing a shortage of the necessary components.

Italy has been hit by the coronavirus outbreak worse than any other country in Europe with around 25,000 positive cases and a total of 1,809 deaths so far - 368 of which occurred in a 24 hour period over the weekend.

Schools, restaurants and shops in the country have been closed down and all non-essential travel banned. Companies have been allowed to continue operating on the proviso that they comply with strict health and safety measures.

Lamborghini has closed its plant near Bologna until March 25 and premium brakes manufacturer Brembo, whose clients include Ferrari, said that four of its plants will be closed this week.

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