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March 26, 2020

Suppliers expect 20% revenue drop in crisis – CLEPA

European automotive supplier association, CLEPA says a poll supported by McKinsey shows 60% of respondents expect to lose 20% or more of revenue.

By Rhodri Morgan

European automotive supplier association, CLEPA says a poll supported by McKinsey shows 60% of respondents expect to lose 20% or more of revenue.

More than half of respondents count on a full recovery time of at least 6-12 months.

Some 95% of respondents call for fiscal support by governments, 80% support labour market measures including temporary work time reduction and 76% call for cash infusion and measures to increase access to liquidity.

“The automotive supply industry needs strongly-coordinated support in Europe a number of areas, including financial and labour related measures”, said CLEPA secretary general, Sigrid De Vries.

“Relaxing State aid rules and providing tax breaks, investment guarantees, loans and other means are essential to help ensure the survival of many healthy companies which are hit by the crisis. Transparency, coordination and the availability of easily accessible information across the EU are a clear need as well.”

Automotive suppliers of all sizes are taking initiatives to help the manufacturing of essential medical equipment and protective gear, as well as to provide support in other ways such as sharing health and safety practices or supporting local communities.

“Many of our members contribute to containing the virus and to saving lives by producing ventilators, providing safety masks and through other means”, added De Vries.

“The period beyond the immediate health crisis must already be in focus too, to help ensure the economic impact can be mitigated as much as possible. Early planning, coordination and synchronisation across borders and supply chains will again be crucial.

“Steps must also be taken to strengthen the global competitiveness of the automotive industry, keeping in view the twin ambition of a carbon-neutral and digital society.

Covid-19 will “undoubtedly” have a major impact on the economy, including the automotive industry, noted CLEPA. Automotive suppliers have announced temporary closures of manufacturing plants at a large scale.

“In most cases only limited production and core functions will continue to uphold essential operations and services, as well as to secure the availability of spare parts for repair and maintenance,” said De Vries.

“It is expected 90% of activity will come to a halt for at least a number of weeks and also non-manufacturing work is increasingly scaled back. Some companies are already in economic distress and need support.”

CLEPA informs its members on a regular basis and has set up a Covid-19 Task Force composed of member companies and associations.

CLEPA is also collaborating with other organisations and stakeholders in Brussels.

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