Fiat Chrysler halts output at most European plants

MILAN — Fiat Chrysler Automobiles is halting production for two weeks at most of its European plants to help protect staff against the coronavirus pandemic and to adjust to a slump in demand.

FCA said production for its Fiat and Maserati units would stop until March 27 at the Italian plants of Melfi, Pomigliano, Cassino, Mirafiori, Grugliasco and Modena.

FCA’s factories in Kragujevac, Serbia, and Tychy, Poland, will also close, the automaker said.

“The temporary suspension enables the group to effectively respond to the interruption in market demand by ensuring the optimization of supply,” FCA said in a statement on Monday.

The company said the freeze would help it to resume activity promptly once market conditions allow it.

“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,” FCA said.

FCA’s Italian factories account for over 65 percent of the automaker’s European production and 18 percent of its global production, according to Jefferies autos analyst Philippe Houchois. The plants have stopped on a mix of component and staff shortage, Houchois said in a note to investors.

Marco Opipari, an analyst at Fidentiis, said a few weeks of closures was not a big problem in an over-supplied European auto industry and lost production could be recovered later on. “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.

With all non essential services closed, including car dealers, and people forced home except for strict working needs, analysts forecast a heavy fall in car sales in March.

FCA’s move follows a similar decision by Ferrari which on Saturday said it was closing its two plants in Italy until March 27 in response to the virus crisis, citing an emerging shortage of parts.

Italy has been the European country worst hit by coronavirus and the first to enforce a nationwide lockdown which has now been replicated by Spain and, to a lesser extent, by France as the pandemic sweeps through the continent.

Italy has closed down schools, shops, restaurants and banned all non-essential travel, while allowing companies to continue to operate provided they comply with strict safety measures.

However, a growing number of manufacturers are opting to suspend production.

Premium brakes maker Brembo, whose clients include Ferrari, said on Friday it would temporarily close its four Italian plants this week.

Lamborghini has closed its only plant near Bologna until March 25.

Automotive News Europe contributed to this report