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    Coronavirus-Bulletin

    Here you will find recent news regarding the effects of COVID-19 on the automotive industry.

    Here you will find recent news regarding the effects of COVID-19 on the automotive industry.

    Berlin, March 25, 2020.

    Today the German Bundestag (lower chamber of parliament) passed measures to combat the economic effects of the coronavirus. They include the supplementary budget for 2020 as presented by the German Government and the Economic Stabilization Fund Act (Wirtschaftsstabilisierungsfondsgesetz).

    VDA President Hildegard Müller welcomed the measures and drew attention to the volume of expected applications: “The assistance measures passed by the German Government and approved today in the Bundestag are right and proper. We are checking whether they take effect in the companies – of all sizes – and hope that the authorities and administrative offices will be in a position to process the very large number of applications within a short time.” For many companies swift help would be essential, Hildegard Müller underscored, and added: “If applications are not processed quickly and assistance is not approved promptly, it will come too late for some companies – during this period it is certainly possible that companies will run into cash flow problems owing to the current situation.”

    The VDA president proposed bringing in other players so that applications could be processed as quickly as possible: “It is worth considering whether state offices should use capacities of the private sector and service providers to process the applications and implement the assistance measures, in order to speed the processes up."

    Berlin, March 24, 2020.

    If employers in Germany are facing a financial crisis owing to the corona pandemic, they will not have to pay social insurance contributions – for a limited period. These contributions can be deferred at the employer’s request.

    “This is an important decision benefiting companies that run into financial problems owing to the corona crisis,” said Hildegard Müller, President of the German Association of the Automotive Industry (VDA).

    These payments may initially be deferred for a maximum period up to the date when the contributions for June become due. A surety is not required. Furthermore, for many companies it is important to know that interest should not be levied on the deferred payments.

    “These deferrals and the waiving of interest will make a crucial difference in securing the companies’ liquidity. We have worked hard for these regulations,” Hildegard Müller explained.

     

    Berlin, March 24, 2020.

    Many companies in the German automotive industry are supporting the production of medical equipment for containing the coronavirus, and have also started donating suitable equipment from their own stocks.

    “Furthermore, the German Association of the Automotive Industry (VDA) has received a number of inquiries about how our member companies can make a greater contribution to producing medical equipment and face masks. We are discussing this intensively with the companies and working on options for short-term support for the production of relevant components, devices and products,” says VDA President Hildegard Müller. 

    All of this must, however, comply with the requirements and processes relating to medical equipment, and it is therefore necessary to carry out the necessary checks responsibly. The German automotive industry accords top priority to people’s safety and the protection of the general public in this unprecedented situation.

    “The companies in the German automotive industry want to contribute to overcoming the current crisis rapidly and successfully,” Hildegard Müller said. “We already have companies that are producing face masks in China, others are now donating hundreds of thousands of these masks. We are discussing additional measures.”

     

    “The Federal Government’s aid package for the German economy, which the Cabinet approved today, mobilizes considerable funding to support companies that run into difficulties in the wake of measures to contain the corona pandemic,” said Hildegard Müller, President of the German Association of the Automotive Industry (VDA), commenting on today’s Cabinet decision.

    “The immediate action on the part of the German Government and the impressive amount of aid demonstrate that the Government is well aware of the risks that the coronavirus poses to people in our country, the economy and German businesses. We therefore wish to express our special gratitude to all those involved in public policy and administration,” Hildegard Müller said.

    The extraordinarily large sums being made available can make a major contribution to safeguarding firms’ liquidity for a certain period of time, Hildegard Müller explained, adding that this was crucial in the current phase of the crisis.

    “Now this aid must reach the companies affected quickly and unbureaucratically,” the VDA president stated. “That also applies in particular to support measures provided through the KfW development bank. Swift disbursement is also important so that any additional measures necessary to stabilize the companies affected can also be brought in rapidly.”

    The VDA sees the planned rescue package as an expedient measure. It is important that it should take effect quickly and that competition should not be distorted.

    The German Association of the Automotive Industry also welcomes the relaxation of the rules for short-time work. Reimbursing affected companies with the full amount of social security contributions represents another important instrument for securing liquidity. All of these measures must now be put into effect rapidly and any doubtful issues must be resolved to the benefit of the firms so that the support materializes quickly.

    Car Markt China 2017 - 02/2020 (Source: CAAM)

    March 23, 2020.

    In China, the crisis triggered by the coronavirus already had a massive impact in February. The passenger car market collapsed, falling by 82 percent to 224,000 units. Following the Chinese New Year festival far-reaching measures came into force to contain the corona pandemic. This had huge effects on car sales. In the first two months of the year, 1.8 million new vehicles were sold in China, which was 44 percent less than in the same period last year. China is the largest automotive market in the world. Worldwide, some major falls may be expected in sales of passenger cars and light vehicles in the coming months.

    Berlin, March 22, 2020.

    Although the situation eased off at the border crossings between Germany and neighboring countries on Saturday, according to the European Commission there are still problems and long queues at many border crossings. For this reason, according to VDA President Hildegard Müller, after border crossing points are closed it is necessary to continue working on maintaining the smoothest possible international freight traffic. She stressed, “However effective the border controls may be, goods transport between the countries must be safeguarded so that shortages do not develop. This requires a unified EU-wide approach. At present there are still considerable problems at the borders in some places.”

    The underlying cause is the decision by the EU Member States to introduce temporary controls at some national borders within the single market to combat the corona crisis, which has led to traffic queues backing up for several kilometers in places.

    Furthermore, Hildegard Müller emphasized, it was crucial that commuters should be able to cross borders, adding: “Passengers must be able to travel, so that cross-border commuters can still get to work. That is essential if companies are to continue producing during this time of crisis. In freight transport, it must be possible not only for vehicles but also the drivers to cross the borders and not be prevented from doing so by quarantine rules.

    Berlin, March 22, 2020.

    The German Government wishes to limit the damage to companies resulting from the corona crisis to the minimum by introducing tax-related measures such as deferrals, simplified procedures, and reduced advance payments. “The automotive industry welcomes the measures introduced by the German Government,” says VDA President Hildegard Müller. “However, we are calling for further action. Deferring wage tax is not one of the measures currently on the cards. The Government should improve this situation. In many cases, deferral of value-added tax does not bring very much relief for export-oriented companies as most of them would be receiving reimbursements,” says the VDA president. VAT is reimbursed when goods are exported to third countries.

     

    Berlin, March 21, 2020.

    The German Government will make more money available over the long term to employers putting their staff on short-time work during the corona crisis. A total of 26 billion euros have been earmarked for this purpose from the reserves of the Federal Employment Agency (BA). “This will create security for both companies and employees. It will be possible to scale production down in a controlled manner,” says VDA President Hildegard Müller. However, she said that it was not yet clear whether payments of social insurance contributions could be postponed. Right now deferrals of this type are possible only in individual cases. “Here the companies need unified rules from the Federal Ministry of Labour and Social Affairs. Deferral of social insurance contributions must be organized rapidly because otherwise these contributions will become due very soon,” the VDA president stated.

    Berlin, March 21, 2020.

    The effects of the coronavirus are creating immense challenges for businesses and the population alike. Appropriate preparations must be initiated now to ensure that the general public continues to receive supplies and that important companies and service providers can carry on operating in times of crisis. VDA President Hildegard Müller underscores the fact that in addition to the extensive measures announced by the German Government further action is also necessary. For example, the opening of workshops, service providers and motor vehicle registration offices should be regulated such that services can continue to be available to the public. Hildegard Müller said, “It is important now to have unified regulations across the country for companies in the motor trade relating to sales, maintenance and servicing. Only if these companies continue operating will it be possible to guarantee that the fleets, including those of the police, the fire service, the health system and in freight transport, can be replaced at the appropriate time and remain functional so that essential services can be provided to the general public.” It must therefore also be possible to register vehicles that have been sold.