Volkswagen burning through $2.2 billion a week as coronavirus halts production: CEO
Volkswagen (VOWG_p.DE) may have to cut jobs if the coronavirus pandemic is not brought under control as the carmaker is still spending about 2 billion euros ($2.2 billion) a week, Chief Executive Herbert Diess told German TV channel ZDF.
Volkswagen (VOWG_p.DE) may have to cut jobs if the coronavirus pandemic is not brought under control as the carmaker is still spending about 2 billion euros ($2.2 billion) a week, Chief Executive Herbert Diess told German TV channel ZDF.
The ECB said last week it would prop up markets, including through the purchase of commercial paper, as part of a 750 billion euro plan to boost asset purchases to contain the financial fallout from coronavirus.
It remains unclear whether the ECB has started buying commercial paper. VW is one of Europe’s most regular corporate issuers of commercial paper.
“There’s a lot of pressure on the incoming money flow,” said Witter. “We have different diversified funding sources available but not all of them are as liquid as they were.”
VW has the capacity to issue up to 15 billon euros of commercial paper under its main funding programme, with another 5 billion euros earmarked for short-term debt in Belgium.
Its ringfenced financial services division has a separate commercial paper programme with a 2.5 billion euro limit.
Witter said Volkswagen, which has yet to tap bank credit lines worth in excess of 20 billion euros, considered those facilities only as a back-up for when capital markets are shut.
In a separate interview with German paper Boersen-Zeitung, Witter said Volkswagen did not see the need to tap state aid to weather the crisis.
Passenger car sales were down 40% in March, Witter told the newspaper, adding that the company was reviewing whether its annual general meeting could take place on May 7.
For now, Volkswagen is sticking to its forecast of paying a dividend but it was looking closely at all investment and spending needs, Witter told Boersen-Zeitung.
A VW spokesman confirmed the remarks made to the papers. (Source: Reuters)
