The global Coronavirus pandemic is having a serious impact on businesses around the world. After several car shows were canceled or delayed including the 2020 Geneva Motor Show and the 2020 New York Auto Show, multiple manufacturers suspended production to reduce the spread of the virus. These manufacturers include:
Porsche announced on Thursday, the manufacturer will suspend production amid the COVID-19 outbreak. Porsche made the decision due to global supply chain disruption and declining customer demand. Their headquarters n Zuffenhausen, Germany, and the production plant in Leipzig, Germany, from Saturday, March 21, for an initial period of two weeks to protect staff and reduce financial losses.
“With these measures, our company contributes to protect the workforce and reduce the spread of the coronavirus. The actual consequences are not yet predictable. It is therefore too early for forecasts. What is clear is that 2020 will be a very challenging year,” said Oliver Blume, Chairman of the Executive Board of Porsche AG.
“We can only overcome the pandemic together and by taking rigorous measures,” Porsche says it will continue to look at the situation, but the hiatus could extend pass March 21st considering how fast the virus is spreading.
Porsche is banning all business travel, office employees are to work remotely, and meetings should not take place in person resulting in teleconference only conferences.
President Donald Trump urged restricting social interactions and gatherings to 10 people or less. The number of municipalities calling for people to engage in social distancing due to the coronavirus pandemic is rising. On Tuesday, health officials have announced an urgent message for all Americans to limit social interactions to help healthcare systems prevent a rise of patients. As of Tuesday, 87 Americans have died with 4,490 infections, an increase of 1,000 confirmed infections from Sunday.
Ian Shepherdson, a chief economist at Pantheon Macroeconomics, states everything will get graver.
“We now guesstimate that second-quarter GDP will drop at a 10% annualized rate, after a 2% fall in Q1,” said Ian Shepherdson, said in a note to clients on Monday.
His forecast suggests consumer spending will decrease in the next few months.
“We are becoming more pessimistic about the near-term economic outlook,” Shepherdson says.
“Discretionary consumers’ spending — that is, consumption excluding housing, healthcare, food, and energy — accounts for some 39% of GDP, and some of the major components are set for massive second quarter meltdowns… We are penciling-in a 20% plunge in discretionary consumers’ spending in the second quarter, enough alone to subtract some eight percentage points from GDP growth.”