While companies shut their factories down across the board and abruptly in March, they’re expected to reopen their various facilities in stages and resume production only gradually. It’s probably going to take months—possibly years—for companies to restore manufacturing to levels reached before the crisis.
There are a litany of challenges the industry will have to overcome in getting back up and running. Stay-home orders vary state-by-state and even country-by-country. Some suppliers, especially smaller ones, have limited financial resources to get assembly lines rolling again and may be less able to procure the personal-protective equipment needed to keep their workers safe.
The extremely costly prospect the whole sector will be trying to avoid is a scenario where production will restart and then have to stop again.
German automakers have been among the first out of the gate, with Daimler’s Mercedes-Benz and BMW starting to operate factories in southern U.S. states at partial capacity. Tesla made plans to start reopening its California plant on May 8, Michigan gave manufacturers the go-ahead to reopen beginning May 11 and General Motors, Ford and Fiat Chrysler have scheduled their start of production for May 18.
Why it matters
Automakers book revenue when cars leave their factories, so suspending production has been incredibly costly. Volkswagen AG, for example, estimated that halting output on both sides of the Atlantic was costing the world’s largest vehicle manufacturer 2 billion euros ($2.2 billion) per week.
There also is a need to restore output to meet demand that has held up better than expected, particularly for pickups. While carmakers may be able to guard against running low on inventory by moderating incentives, including 0% financing offers, they’re going to be eager to replenish supply of their big money-making trucks and sport-utility vehicles first.