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Westlake Legal Group > Posts tagged "Daimler AG"

European Car Sales Fall the Most in Decades, Signaling Slump

Westlake Legal Group european-car-sales-fall-the-most-in-decades-signaling-slump European Car Sales Fall the Most in Decades, Signaling Slump Volkswagen AG Quarantines Mercedes-Benz Hyundai Motor Co Fiat Chrysler Automobiles NV Factories and Manufacturing European Automobile Manufacturers' Assn Europe Daimler AG Coronavirus (2019-nCoV) Citroen China Bayerische Motorenwerke AG
Westlake Legal Group 17virus-eu-cars-1-facebookJumbo European Car Sales Fall the Most in Decades, Signaling Slump Volkswagen AG Quarantines Mercedes-Benz Hyundai Motor Co Fiat Chrysler Automobiles NV Factories and Manufacturing European Automobile Manufacturers' Assn Europe Daimler AG Coronavirus (2019-nCoV) Citroen China Bayerische Motorenwerke AG

FRANKFURT — European car sales went over a cliff in March, falling to their lowest level in at least 30 years, according to data published Friday that provided one of the first concrete indications of the economic damage caused by coronavirus lockdowns.

Most of the previous available economic data dated from before the lockdowns began and is all but useless. Also, the car industry is a bellwether for overall economic growth in the European Union because it is a pillar of manufacturing and employs so many people — 2.6 million, or 9 percent of all factory workers in the bloc. Based on the March sales numbers, the outlook is not good.

New car registrations fell by more than half from a year earlier, to 570,000 from 1.3 million, the European Automobile Manufacturers Association said. It was by far the worst March for auto sales since at least 1990. Comparisons before then are of limited value because Europe was still divided by the Iron Curtain.

The new registration figures may be even worse than they sound. It was only around the middle of the month that most car dealers in Europe closed their doors, factories went idle and buyers were told to stay at home.

Italy, which went into lockdown first, suffered the biggest drop in car sales: 85 percent in March. That suggests that the damage to the European car industry could be even more severe in April, depending on how quickly lockdowns ease.

Automakers are eager to get their assembly lines rolling again, and some — including Volkswagen, Volvo and Daimler — will cautiously begin doing so on Monday.

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The companies will essentially be conducting a grand experiment in whether it is possible to run a big factory without exposing workers to infection and provoking a renewed outbreak.

“The best thing we can do to help society is to find ways to restart the company in a safe way,” Hakan Samuelsson, the chief executive of Volvo Cars, said in a statement on Friday.

Assembly lines will be staffed by workers in masks and protective clothing, sometimes separated from one another by plastic screens. Shift changes will be staggered to minimize the number of people who come in contact with others.

Showrooms will also begin reopening. Opel, a unit of the French automaker PSA, said it would reopen its German dealerships on Monday after the German government announced that it would gradually ease lockdown restrictions.

The big question now is how quickly sales will rebound, and how much of the lost revenue car companies will be able to make up later in the year. Even after the virus recedes, carmakers will face formidable problems.

Many people are likely to re-emerge from home quarantine significantly poorer because they lost their jobs or suffered steep declines in income. Supply chains are in turmoil. The economy of China, a critical market for Volvo and the German carmakers, shrank for the first time in decades, the government reported Friday.

The sales declines could leave permanent scars on some automakers, many of which were already struggling. Fiat Chrysler sales plummeted 77 percent in March, reflecting the grave health crisis in its stronghold of Italy.

The company sold 27,000 cars during the month, including sales in Britain and Switzerland, which are not members of the European Union. Fiat fell behind not only most of its European rivals but also foreign brands like Hyundai and Toyota that were once considered niche players.

PSA, whose sales are skewed toward southern Europe, also suffered disproportionately. Its sales plunged 68 percent, in line with declines of around 70 percent in Spain and France. PSA, whose brands include Peugeot, Citroën and Opel, is merging with Fiat.

The German carmakers BMW, Daimler and Volkswagen fared marginally better, with declines of less than 50 percent. But it is unclear whether they are more resistant to the economic chaos caused by the virus or simply benefiting temporarily from their strength in northern European countries that generally began lockdowns later in March.

New registrations in Germany fell 38 percent during the month, still a catastrophic decline. Vehicles are Germany’s biggest export, and its economy is much more dependent on the auto industry than is France’s or Italy’s.

Most assembly-line employees have been furloughed, but at least some will be reporting to work on Monday.

Volkswagen, which has already restarted limited production at some parts factories, plans to reopen factories in Zwickau, Germany, and Bratislava, Slovakia, on Monday. Other factories around the world will follow later in April and in May, Volkswagen said.

Daimler, the maker of Mercedes-Benz cars and trucks, said that next week it would reopen three German factories that produce vital parts, such as a system made in Berlin that controls the valves of an internal combustion engine. The plants will initially operate for one shift a day as Daimler gradually restarts operations in Germany.

BMW has begun preparations to reopen factories, a spokeswoman said Friday, but at the moment does not plan to do so before the end of April.

Volvo Cars said it would reopen its factories and offices in Sweden on Monday. Workers entering the plant will be able to voluntarily submit to health checks, and workstations have been rearranged to keep employees at a safe distance from one another, the company said.

Fiat, PSA and Renault have not yet said when they will reopen their factories.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Coronavirus Outbreak Deepens Its Toll on Global Business

Westlake Legal Group 21virusbusiness-2-facebookJumbo Coronavirus Outbreak Deepens Its Toll on Global Business Stocks and Bonds Shutdowns (Institutional) Mercedes-Benz Jaguar Land Rover International Air Transport Assn Interest Rates Foxconn Technology Factories and Manufacturing Economic Conditions and Trends Daimler AG Coronavirus (2019-nCoV) China Cathay Pacific Airways Airlines and Airplanes AIR France-KLM adidas AG

A loss of $29 billion in airline revenue. China auto sales down by 92 percent. Interruptions for Procter & Gamble’s 387 suppliers in China.

As the coronavirus outbreak rattles the global economy and disrupts supply chains, international companies across nearly every industry are confronting a stark reality: Business will not go on as usual.

And investors have taken notice. U.S. stocks fell for the second-straight day on Friday. Shares of energy, airline and technology companies led the broader market lower on Wall Street, as the S&P closed more than 1 percent lower, putting it on pace for its worst day of the month. Oil and gas prices also fell, with the price of a barrel of benchmark American crude slipping nearly 1 percent. The markets have become more volatile since the outbreak, but American investors have largely shrugged off the threat. Since Jan. 7, when Chinese officials identified the virus, the S&P 500 remains up more than 3 percent, even after this morning’s sell-off. — Matt Philips

The International Air Transport Association this week warned of a deep downturn in earnings among global carriers related to the collapse of travel in Asia because of the virus.

The virus outbreak could reduce global airline revenue by about $29 billion in this year, resulting in a small industry contraction compared with 2019, it said.

Virtually all of the losses are expected to hit airlines in the Asia-Pacific region, which are facing a 13 percent decline in passenger demand for the year, according to the association’s analysis.

Some airlines have begun to acknowledge the outbreak’s effects, with Air France-KLM Group and Australia’s Qantas Group separately warning on Thursday of a potential financial hit.

Qantas said that the coronavirus could reduce its profit for the fiscal year that ends June 30 by $66 million to $99 million, while Air France-KLM estimated a hit to earnings of as much as $216 million between February and April this year.

More than 20 international airlines have suspended or restricted routes that end in Wuhan, the center of the outbreak, and other major Chinese cities.

  • What do you need to know? Start here.

    Updated Feb. 10, 2020

    • What is a Coronavirus?
      It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is possibly transmitted through the air. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • How worried should I be?
      While the virus is a serious public health concern, the risk to most people outside China remains very low, and seasonal flu is a more immediate threat.
    • Who is working to contain the virus?
      World Health Organization officials have praised China’s aggressive response to the virus by closing transportation, schools and markets. This week, a team of experts from the W.H.O. arrived in Beijing to offer assistance.
    • What if I’m traveling?
      The United States and Australia are temporarily denying entry to noncitizens who recently traveled to China and several airlines have canceled flights.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.

And airlines in Asia are cutting flights elsewhere. Singapore Airlines said it would temporarily cut flights between the city state and major destinations like New York, Paris, London, Tokyo, Seoul and Sydney.

Cathay Pacific, the Hong Kong carrier, has also canceled nearly all of its flights to mainland China and is reducing service elsewhere over the next two months. — Niraj Chokshi and Amie Tsang

Auto sales in China collapsed this month, with the Chinese Passenger Car Association saying that sales at dealerships had plummeted 92 percent in the first half of February compared with the same time last year.

China is the world’s biggest car market by a wide margin. So a nose-dive in sales there hurts the global industry.

The German luxury auto giant Daimler — which makes Mercedes-Benz — cautioned in its annual report that the virus could lead to a significant drop in Chinese economic growth. The report said the virus “may not only affect the development of unit sales, but may also lead to significant adverse effects on production, the procurement market and the supply chain.”

Jaguar Land Rover warned that the coronavirus could soon begin to create production problems at its assembly plants in Britain.

Like many carmakers, Jaguar Land Rover uses parts made in China. With factories there shut down or operating at reduced capacity, assembly lines in the rest of the world are expected to run short of essential components. — Keith Bradsher

With much of China still on lockdown, businesses are struggling to get workers back and factories running.

In a release this week, Foxconn, the world’s largest contract manufacturer of electronics and a key player in Apple’s supply chain, indicated just how difficult that will be. Foxconn said its revenue would take a hit from the spread of the coronavirus, and that it would be “cautious” in resuming work at its factories in China. Plants outside of the country, in places like Vietnam and Mexico, were at full capacity, the company said.

The revenue warning comes as Chinese leaders try to balance restarting the economy with controlling the virus. Concerns about Foxconn’s production also underscore the potential broader impact the epidemic could have on global electronic supply chains. A huge portion of the world’s electronics come out of China’s factories, filled with parts also made in China’s factories, and a longer suspension of production could hit overall supply. Some have even warned that it could hasten a decoupling, which has been urged at times by both Chinese and American leaders out of security concerns. — Paul Mozur

Procter & Gamble, the consumer products behemoth, said in a federal filing this week that disruptions to supply and demand caused by the outbreak would “materially” affect the company’s quarterly results.

“China is our second largest market — sales and profit,” Jon R. Moeller, a company executive, said at a conference in New York on Thursday, according to the filing. “Store traffic is down considerably, with many stores closed or operating with reduced hours. Some of the demand has shifted online but supply of delivery operators and labor is limited.”

The company relies on 387 suppliers in China, each facing difficulties in resuming operations, Mr. Moeller said. — Niraj Chokshi

The French government said it would urge companies to review their “over-dependence” on China for raw materials and parts as the outbreak exposes weaknesses among French manufacturers that have outsourced their supply chains there.

The French finance minister, Bruno Le Maire, singled out automakers, which have been having trouble getting parts like brake pedals, and the pharmaceutical industry, which gets 80 percent of the raw materials for some drugs from China and Asia.

The government estimated the economy may shrink by around 0.1 percent this year as result of the outbreak. Wuhan, the center of the outbreak, is home to more than one third of all French investment in China. — Liz Alderman

China’s banks are lowering borrowing costs for companies and households to try to soften the economic blow of the coronavirus.

The move follows a rash of policies from China’s central bank to shore up an economy hobbled by weeks of a near nationwide shutdown of business. On Thursday, the People’s Bank of China said it lowered the one-year loan prime rate to 4.05 percent from 4.15 percent, and slashed the five-year loan rate to 4.75 percent from 4.8 percent.

Economists are lowering their growth expectations for China this year as businesses are only just beginning — somewhat haltingly — to get back to work. Some said the move would do little to address the widespread impact of the epidemic on China’s once vibrant business community. — Alexandra Stevenson

Adidas, the German sportswear maker, said that its mainland China business had been decimated by the outbreak.

Sales in the region dropped by about 85 percent since Chinese New Year on Jan. 25, the company said, compared with the same period a year ago. Fewer shoppers in South Korea and Japan also contributed to the falloff in sales, a result of the sharp drop in Chinese tourism that has also affected the aviation and hospitality sectors as well as the fashion retail business.

Adidas sells its products from about 12,000 stores in China, around 500 of them its own stores and the rest franchises. — Elizabeth Paton

Geneva Abdul contributed reporting.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Coronavirus Shock Could Push Europe Into a Downturn

Westlake Legal Group 11europeecon-1-facebookJumbo Coronavirus Shock Could Push Europe Into a Downturn Recession and Depression Mercedes-Benz Eurozone Economic Conditions and Trends Daimler AG Coronavirus (2019-nCoV) Automobiles

FRANKFURT — So far, only scattered cases of the coronavirus have appeared in Europe, but the economic effects are proving harder to quarantine. The shock may be severe enough to push the vulnerable German economy, and perhaps the entire eurozone, into a recession.

That is the conclusion of a growing number of economists as it becomes clear that it will take weeks, at best, before the Chinese economy resumes its role as a prolific exporter of essential factory goods, and as an increasingly important consumer market for the rest of the world.

“The longer it takes for production to resume, the higher the risks,” said Jörg Krämer, chief economist at Commerzbank in Frankfurt.

For the chief executive of Daimler, one of Germany’s most prominent companies with several auto plants in China, the crisis is one of uncertainty.

“I’m calling China every day,” Ola Källenius said at a news conference in Stuttgart on Tuesday. “It’s too early to say if and how other factories could be affected. We are talking about global networks.”

The rest of the world could also suffer economically, the Federal Reserve chair, Jerome H. Powell, warned lawmakers on Tuesday.

“We are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy,” Mr. Powell told House Financial Services Committee members.

A dismal profit report by Daimler on Tuesday underlined why it would not take much to shove the eurozone, the 19 European countries that use the euro, into a downturn. That would exacerbate a slump in global trade that was manifesting long before the coronavirus claimed its first victims.

Daimler said that it slipped into the red at the end of 2019, battered by the cost of adjusting to new technology and by penalties from diesel emissions cheating.

Vehicles are Germany’s biggest export, as well as an important part of the national identity. Many economists predict that official data to be published Friday will show that the German economy shrank in the fourth quarter of 2019 because of a slump in manufacturing.

  • What do you need to know? Start here.

    Updated Feb. 10, 2020

    • What is a Coronavirus?
      It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is possibly transmitted through the air. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • How worried should I be?
      While the virus is a serious public health concern, the risk to most people outside China remains very low, and seasonal flu is a more immediate threat.
    • Who is working to contain the virus?
      World Health Organization officials have praised China’s aggressive response to the virus by closing transportation, schools and markets. This week, a team of experts from the W.H.O. arrived in Beijing to offer assistance.
    • What if I’m traveling?
      The United States and Australia are temporarily denying entry to noncitizens who recently traveled to China and several airlines have canceled flights.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.

The problems of German automakers reverberate around the Continent, because so many small and midsize parts suppliers in countries depend on them for sales. Italy’s economy shrank in the fourth quarter in part because its industrial north is closely linked to Germany.

“For most countries, Germany is the most important trading partner,” said Carsten Brzeski, chief economist at ING Germany. “If it starts to slow down, other countries will feel it.”

Daimler reported a quarterly loss of 11 million euros, or $12 million, compared with a profit of €1.6 billion in the fourth quarter of 2018. The evaporating earnings put Daimler, the maker of Mercedes-Benz cars and trucks, in a weak position as it confronts the economic consequences of the coronavirus outbreak.

Daimler and other carmakers were forced to keep their factories in China closed longer than planned after the Lunar New Year holiday, and the virus has kept people out of showrooms. On Monday, the company said it had begun gradually ramping up production at its Chinese factories.

But the situation remains tense and unpredictable. There is widespread concern that assembly lines around the world could be forced to shut down for lack of components made in China.

China has become a critical market for all German carmakers. Daimler sold nearly 700,000 Mercedes-Benz cars in China last year, more than twice as many as it sold in the United States.

For the full year, net profit at Daimler plummeted 64 percent to €2.7 billion. Sales in 2019 rose 3 percent, to €173 billion.

“The coronavirus provides a substantial risk for the expected global recovery, as hopes were pinned on an improvement of the Chinese economy,” Stefan Schneider, an economist at Deutsche Bank, said in a note to clients on Tuesday. A recession in Germany early this year is “quite probable,” Mr. Schneider added.

Smaller companies are also affected. Many have factories in China that have been idle or operating far below capacity.

Ziehl-Abegg, a German maker of industrial fans, has a factory in Shanghai with 450 workers who produce air-circulation systems for hospitals, among other things. The high-performance fans have been in high demand during the crisis.

Nevertheless, Chinese authorities allowed only a skeleton crew on the site last week to fill orders from newly built hospitals in Wuhan, Shandong and Shenzhen, said Rainer Grill, a Ziehl-Abegg spokesman.

Even after the Shanghai factory was allowed to reopen this week, fewer than half of the employees reported to work. They were under orders to stay home because they had visited affected areas of China during the Lunar New Year.

Every week that the Shanghai plant stays closed costs Ziehl-Abegg €2 million, Mr. Grill said.

German machinery makers like Ziehl-Abegg are coming off a terrible year and can hardly afford any more problems. New orders for products like machine tools or construction machinery slumped 9 percent in 2019 because of President Trump’s trade war, Brexit and auto industry woes.

“The political turmoil created uncertainty, and uncertainty is poison for investment,” said Olaf Wortmann, economist for the Mechanical Engineering Industry Association in Frankfurt.

The coronavirus outbreak is another blow. Some of the lost sales may be recouped once the virus fades, Mr. Wortmann said. But, he added, “the longer this virus spreads its misery, the harder it will be to catch up later.”

The German car industry is in a damaged state in part because of its own misconduct. Like its rival Volkswagen, Daimler faces substantial costs from accusations that it programmed diesel vehicles to cheat on emissions tests. Daimler said on Tuesday that it had set aside €1.5 billion during the quarter, and a total of €4 billion for the year, to cover the cost of legal proceedings and penalties in Europe, the United States and other places.

The company has disclosed that it is under investigation in the United States by the Department of Justice, the Environmental Protection Agency and California regulators, as well as by the authorities in Europe and other jurisdictions.

The accusations have put Daimler on the defensive just as the auto industry is in the midst of its biggest shift in technology in a century. Like other carmakers, Daimler must invest billions in electric cars and autonomous driving, or risk becoming irrelevant.

“The whole industry is in transformation,” said Mr. Källenius, the Daimler chief executive. “In 10 years, we won’t be the same company.”

Jeanna Smialek contributed reporting from Washington.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Coronavirus Shock Could Push Europe Into a Downturn

Westlake Legal Group 11europeecon-1-facebookJumbo Coronavirus Shock Could Push Europe Into a Downturn Recession and Depression Mercedes-Benz Eurozone Economic Conditions and Trends Daimler AG Coronavirus (2019-nCoV) Automobiles

FRANKFURT — So far, only scattered cases of the coronavirus have appeared in Europe, but the economic effects are proving harder to quarantine. The shock may be severe enough to push the vulnerable German economy, and perhaps the entire eurozone, into a recession.

That is the conclusion of a growing number of economists as it becomes clear that it will take weeks, at best, before the Chinese economy resumes its role as a prolific exporter of essential factory goods, and as an increasingly important consumer market for the rest of the world.

“The longer it takes for production to resume, the higher the risks,” said Jörg Krämer, chief economist at Commerzbank in Frankfurt.

For the chief executive of Daimler, one of Germany’s most prominent companies with several auto plants in China, the crisis is one of uncertainty.

“I’m calling China every day,” Ola Källenius said at a news conference in Stuttgart on Tuesday. “It’s too early to say if and how other factories could be affected. We are talking about global networks.”

The rest of the world could also suffer economically, the Federal Reserve chair, Jerome H. Powell, warned lawmakers on Tuesday.

“We are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy,” Mr. Powell told House Financial Services Committee members.

A dismal profit report by Daimler on Tuesday underlined why it would not take much to shove the eurozone, the 19 European countries that use the euro, into a downturn. That would exacerbate a slump in global trade that was manifesting long before the coronavirus claimed its first victims.

Daimler said that it slipped into the red at the end of 2019, battered by the cost of adjusting to new technology and by penalties from diesel emissions cheating.

Vehicles are Germany’s biggest export, as well as an important part of the national identity. Many economists predict that official data to be published Friday will show that the German economy shrank in the fourth quarter of 2019 because of a slump in manufacturing.

  • What do you need to know? Start here.

    Updated Feb. 10, 2020

    • What is a Coronavirus?
      It is a novel virus named for the crown-like spikes that protrude from its surface. The coronavirus can infect both animals and people, and can cause a range of respiratory illnesses from the common cold to more dangerous conditions like Severe Acute Respiratory Syndrome, or SARS.
    • How contagious is the virus?
      According to preliminary research, it seems moderately infectious, similar to SARS, and is possibly transmitted through the air. Scientists have estimated that each infected person could spread it to somewhere between 1.5 and 3.5 people without effective containment measures.
    • How worried should I be?
      While the virus is a serious public health concern, the risk to most people outside China remains very low, and seasonal flu is a more immediate threat.
    • Who is working to contain the virus?
      World Health Organization officials have praised China’s aggressive response to the virus by closing transportation, schools and markets. This week, a team of experts from the W.H.O. arrived in Beijing to offer assistance.
    • What if I’m traveling?
      The United States and Australia are temporarily denying entry to noncitizens who recently traveled to China and several airlines have canceled flights.
    • How do I keep myself and others safe?
      Washing your hands frequently is the most important thing you can do, along with staying at home when you’re sick.

The problems of German automakers reverberate around the Continent, because so many small and midsize parts suppliers in countries depend on them for sales. Italy’s economy shrank in the fourth quarter in part because its industrial north is closely linked to Germany.

“For most countries, Germany is the most important trading partner,” said Carsten Brzeski, chief economist at ING Germany. “If it starts to slow down, other countries will feel it.”

Daimler reported a quarterly loss of 11 million euros, or $12 million, compared with a profit of €1.6 billion in the fourth quarter of 2018. The evaporating earnings put Daimler, the maker of Mercedes-Benz cars and trucks, in a weak position as it confronts the economic consequences of the coronavirus outbreak.

Daimler and other carmakers were forced to keep their factories in China closed longer than planned after the Lunar New Year holiday, and the virus has kept people out of showrooms. On Monday, the company said it had begun gradually ramping up production at its Chinese factories.

But the situation remains tense and unpredictable. There is widespread concern that assembly lines around the world could be forced to shut down for lack of components made in China.

China has become a critical market for all German carmakers. Daimler sold nearly 700,000 Mercedes-Benz cars in China last year, more than twice as many as it sold in the United States.

For the full year, net profit at Daimler plummeted 64 percent to €2.7 billion. Sales in 2019 rose 3 percent, to €173 billion.

“The coronavirus provides a substantial risk for the expected global recovery, as hopes were pinned on an improvement of the Chinese economy,” Stefan Schneider, an economist at Deutsche Bank, said in a note to clients on Tuesday. A recession in Germany early this year is “quite probable,” Mr. Schneider added.

Smaller companies are also affected. Many have factories in China that have been idle or operating far below capacity.

Ziehl-Abegg, a German maker of industrial fans, has a factory in Shanghai with 450 workers who produce air-circulation systems for hospitals, among other things. The high-performance fans have been in high demand during the crisis.

Nevertheless, Chinese authorities allowed only a skeleton crew on the site last week to fill orders from newly built hospitals in Wuhan, Shandong and Shenzhen, said Rainer Grill, a Ziehl-Abegg spokesman.

Even after the Shanghai factory was allowed to reopen this week, fewer than half of the employees reported to work. They were under orders to stay home because they had visited affected areas of China during the Lunar New Year.

Every week that the Shanghai plant stays closed costs Ziehl-Abegg €2 million, Mr. Grill said.

German machinery makers like Ziehl-Abegg are coming off a terrible year and can hardly afford any more problems. New orders for products like machine tools or construction machinery slumped 9 percent in 2019 because of President Trump’s trade war, Brexit and auto industry woes.

“The political turmoil created uncertainty, and uncertainty is poison for investment,” said Olaf Wortmann, economist for the Mechanical Engineering Industry Association in Frankfurt.

The coronavirus outbreak is another blow. Some of the lost sales may be recouped once the virus fades, Mr. Wortmann said. But, he added, “the longer this virus spreads its misery, the harder it will be to catch up later.”

The German car industry is in a damaged state in part because of its own misconduct. Like its rival Volkswagen, Daimler faces substantial costs from accusations that it programmed diesel vehicles to cheat on emissions tests. Daimler said on Tuesday that it had set aside €1.5 billion during the quarter, and a total of €4 billion for the year, to cover the cost of legal proceedings and penalties in Europe, the United States and other places.

The company has disclosed that it is under investigation in the United States by the Department of Justice, the Environmental Protection Agency and California regulators, as well as by the authorities in Europe and other jurisdictions.

The accusations have put Daimler on the defensive just as the auto industry is in the midst of its biggest shift in technology in a century. Like other carmakers, Daimler must invest billions in electric cars and autonomous driving, or risk becoming irrelevant.

“The whole industry is in transformation,” said Mr. Källenius, the Daimler chief executive. “In 10 years, we won’t be the same company.”

Jeanna Smialek contributed reporting from Washington.

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The Concept Cars Gleam, but Executive Dread Clouds the Frankfurt Auto Show

FRANKFURT — Car executives are paid to be optimists, but behind the pomp and salesmanship at the Frankfurt International Motor Show this week lurked an unmistakable sense of angst.

The talk among industry insiders at the show, one of the auto industry’s biggest events, reflected the existential threats that carmakers face.

The European and global auto markets are in decline. Carmakers are betting their futures on electric vehicles whose marketability is untested. Manufacturers are under intense public and regulatory pressure because of the role that vehicles play in climate change. The global trade war has disrupted supply chains.

Even auto shows are under threat. Many manufacturers scaled back their presence in Frankfurt this year or skipped the show altogether. Companies like Toyota and Fiat Chrysler decided the benefits didn’t justify the millions of euros it takes to put on a display.

“It’s an unprecedented situation we are in,” said Wolf-Henning Scheider, chief executive of ZF Friedrichshafen, a German transmission maker that has an extensive network of factories in the United States, Europe and China.

ImageWestlake Legal Group merlin_160607595_7d94f124-21ce-4b9a-93e8-299d119337a0-articleLarge The Concept Cars Gleam, but Executive Dread Clouds the Frankfurt Auto Show Volkswagen AG Renault SA Mercedes-Benz International Trade and World Market Greenhouse Gas Emissions Fuel Efficiency Frankfurt Auto Show Frankfurt (Germany) Engines Electric and Hybrid Vehicles Driverless and Semiautonomous Vehicles Daimler AG Batteries Automobiles

BMW is showing an electric Mini.CreditFelix Schmitt for The New York Times

Volkswagen is producing its ID.3 electric sedan with wind and solar energy.CreditFelix Schmitt for The New York Times

Mr. Scheider noted that carmakers must invest vast sums in electric vehicles and autonomous driving at the same time they are coping with a trade war. “All these at the same time is new,” Mr. Scheider said in an interview.

The Frankfurt show was as good a place as any to find out how auto executives plan to survive the tsunami. Here are some of the main takeaways.

Protests by environmental groups were especially intense this year, as carmakers increasingly take the blame for climate change. Volkswagen alone accounts for more than 1 percent of greenhouse gas emissions worldwide, according to the company’s own calculations.

This week Greenpeace activists stood on the roofs of S.U.V.s on display at the Frankfurt exhibition grounds with signs that chided, “Climate Killer.” The militant group Attac planned to blockade streets and bring traffic to a standstill on Saturday, the day the show opens to the public.

Carmakers are desperate to show that they get the message. Ola Källenius, chief executive of Daimler, said in Frankfurt that the company’s Mercedes-Benz factories will be carbon neutral next year.

Volkswagen is producing its ID.3 electric sedan with wind and solar energy, and offsetting any additional emissions by financing a project in the rainforests of Borneo. At an event this week to unveil the ID.3, guests were handed bamboo forks to eat hors d’oeuvres.

“We’re serious,” Herbert Diess, the Volkswagen chief executive, said during a debate with Tina Velo, a leader of Attac, who questioned the company’s commitment to the environment.

But carmakers still make most of their money from fuel-thirsty S.U.V.s. Nicolas Peter, chief financial officer of BMW, said the industry couldn’t solve its image problems with public relations alone.

“We have to do the right thing,” he told a small group of reporters on Tuesday.

Carmakers are operating on the assumption that tensions between China and the United States won’t be resolved soon. They are rethinking their supply chains and moving production closer to customers so that fewer goods have to cross borders and be exposed to tariffs.

That applies to software as well as hardware. Mr. Scheider of ZF said that, for security reasons, autonomous driving technology developed for the United States has to be kept out of China and vice versa. “That is a risk, that these two regions drift apart,” he said.

Forced to choose, many companies would have to pick China. It has become by far the biggest car market, and several executives said they expected it to keep growing despite a recent decline in sales. Mr. Scheider pointed out that rates of car ownership were still low outside the major cities.

“I’m pretty confident the Chinese market will grow continuously,” he said.

A slew of mainstream carmakers unveiled battery-powered cars in Frankfurt that will sell at prices within reach of middle-class households.

The most important new product at the show is easily the ID.3, a four-door hatchback that Volkswagen said would be the first in a line of affordable battery-powered vehicles, including an S.U.V. and a minivan.

Honda unveiled an electric vehicle known simply as the E, and BMW showed an electric version of its popular Mini. Including incentives available in the United States, Germany and other countries, the end price of these vehicles should be 30,000 euros ($33,000) or less. Because electric cars have fewer moving parts and require less maintenance, the cost of ownership may be lower than for a conventional car.

Ola Källenius, chief executive of Daimler. He said the company’s Mercedes-Benz factories would be carbon neutral next year.CreditFelix Schmitt for The New York Times

But no one knows yet whether these vehicles will be popular enough to justify the investment and allow carmakers to meet European Union fuel economy targets that take effect next year. Carmakers that fail to deliver average fuel economy of 57 miles per gallon face draconian fines.

Regret is written on the faces of auto executives’ faces when they say it, but the age of the internal combustion engine is slowly coming to an end.

“One is amazed at what can still be achieved with the internal combustion engine,” said Markus Schäfer, the head of research and development at Daimler. He added, however: “Of course the main focus is on electrification.”

Mr. Schäfer told a small group of reporters that Mercedes did not plan to develop any more internal combustion engines after it finished the rollout of a new four-cylinder motor, which is underway. “That is the last,” he said.

But battery-powered cars are likely to be less profitable for carmakers, which tend to operate on thin margins to begin with. Most make their own gasoline or diesel motors. They must buy batteries from suppliers like LG Chem of South Korea, Panasonic of Japan or CATL of China, which will keep a big chunk of the profits.

Batteries for electric cars have made rapid progress in the last decade, dropping in price and delivering more juice per pound than even a few years ago. The latest generation of the Renault Zoe can travel 395 kilometers, or 245 miles, on a charge, more than double the range of the first generation, which went on sale in 2012.

“In less than a decade, we already have done huge progress,” Gilles Normand, senior vice president for electric vehicles at Renault, said in an interview. “You can easily imagine what’s going to come in the next 10 years.”

The BMW Vision iNext luxury electric automobile, left, and a Vision M Next concept car.CreditFelix Schmitt for The New York Times

Thierry Bolloré, the chief executive of Renault, said that the company was working on a €10,000 ($12,000) electric car. “We have a clear estimate that this is reachable, absolutely, and still make money,” Mr. Bolloré said during a news conference Tuesday.

Others are more pessimistic. The prevailing lithium-ion technology will probably reach its limits in five years, Mr. Schäfer of Daimler said. Further progress will rest on new technologies such as solid state batteries, which will weigh less and be easier to cool but are not yet ready for mass production. “We need a quantum leap in the technology,” Mr. Schäfer said.

Some companies will adapt to new technologies, but some won’t be able to invest enough to stay competitive.

Mergers would be a way out for weaker companies, but those have proved difficult. Mr. Bolloré of Renault said in Frankfurt that there was no effort to revive the aborted deal with Fiat Chrysler.

“We are not talking to each other,” he told reporters. “The offer was on the table. It’s no longer on the table. That’s it.” Mr. Bolloré added that he regretted the merger hadn’t worked out.

The coming shakeout may be most brutal among suppliers, particularly smaller companies far down the industry food chain that supply specialized parts for combustion engines.

“Every downturn, there is a consolidation that takes place,” said Derek Jenkins, a former Mazda and Volkswagen executive who is senior vice president of design at Lucid, a California company that plans to begin producing a luxury electric car at the end of 2020. Lucid, backed by Saudi investors, is an example of the start-ups challenging the established carmakers.

“Brands disappear,” Mr. Jenkins said in an interview. “That will happen in the next downturn cycle.”

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Beijing Auto Buys Daimler Stake, Bolstering German Carmaker’s Ties to China

Westlake Legal Group 23daimler-facebookJumbo Beijing Auto Buys Daimler Stake, Bolstering German Carmaker’s Ties to China Mergers, Acquisitions and Divestitures Germany Daimler AG China Beijing Automotive Group Co., Ltd. Automobiles

SHANGHAI — Beijing Automotive Group said on Tuesday that it would acquire a stake in the German carmaker Daimler, deepening the company’s ties to China’s vast but troubled car market and illustrating the country’s growing clout in the global auto industry.

The Beijing company said it would acquire shares and voting rights equal to a 5 percent stake in Daimler. The two companies are already partners in China, which has long required foreign automakers to strike comprehensive joint ventures with Chinese firms in order to make cars.

Beijing Auto’s acquisition of a Daimler stake may fan concerns in Germany about China’s growing influence in the country’s industrial sector. Over the past few years, Chinese companies have been big buyers of medium and large German companies in the sector, most notably Kuka, a leading maker of industrial robots. Last year, inspired in part by the Kuka deal, European Union members agreed on new rules that give its members more power to scrutinize foreign investments.

China has surpassed the United States as the world’s largest car market, and it is increasingly in a position to set the agenda for automakers. Beijing requires automakers to sell large and growing numbers of electric cars, partly to improve the country’s air quality and partly to limit its reliance on imported oil.

Li Shufu, the chairman of Zhejiang Geely Holding Group, owns just under 10 percent of Daimler through a separate investment firm, meaning that together Chinese companies will control almost 15 percent of the company that makes Mercedes-Benz cars. Daimler, whose founders are widely considered the inventors of the automobile, has long been a cornerstone of German industry.

“Acquisition is the Chinese wheelhouse for accumulating wealth and power,” said Michael Dunne, the chief executive of Zozo Go, an automotive consulting firm in San Diego, using the acronym for Beijing Auto.

Beijing is also a major force in the shift toward electric cars because Chinese companies are the world’s dominant producers of electric and electronic equipment, while they lag in many of the technologies associated with the internal combustion engine.

Beijing Auto’s investment in Daimler will probably be less controversial than some other Chinese corporate incursions into Europe, because the two companies have been working together since 2003. Daimler already owns a 10 percent stake in Beijing Auto.

The transaction announced on Tuesday is more about enhancing existing ties than it is about a new push by China for greater influence at Daimler, said Yale Zhang, the managing director of Automotive Foresight, a Shanghai consulting firm

“This will strengthen their relationship,” Mr. Zhang said in a telephone interview.

The deal coincides with efforts by automakers across China to maneuver for control of joint ventures. President Xi Jinping announced last year, under pressure from the United States, that in the coming years he would eliminate a requirement that foreign automakers assemble cars in China only through 50-50 joint ventures with local automakers. The German automaker BMW has already disclosed plans to increase its stake in its joint venture with Brilliance Auto of China when the current regulations are erased.

Beijing Auto was able to acquire Daimler shares on the open market while they are relatively cheap. The stock has lost more than a third of its value since the beginning of 2018, and it has been under pressure since Daimler issued a profit warning this month. The shares rose almost 5 percent in trading in Frankfurt on Tuesday.

Based on Daimler’s current market capitalization, a 5 percent stake would be valued at roughly $2.8 billion.

Daimler said it welcomed the investment.

“The Chinese market is and remains a crucial pillar of our success, not only for sales, but also for our product development and production,” Ola Källenius, Daimler’s chief executive, said in a statement.

Daimler’s China sales rose 5 percent last year compared with 2017, but a shadow hangs over the broader Chinese market. Car sales in the country have plunged in recent months as consumers show signs of nervousness over slowing economic growth. New emissions rules have also been a factor.

Daimler warned on July 12 that it would report a pretax loss of 1.6 billion euros, or $1.8 billion, for the second quarter. The company blamed the poor results on slumping sales and the cost of investigations into whether it had sold diesel cars that evaded emissions regulations. Most carmakers are under pressure because sales are slumping in every major market, including China.

Germany’s makers of luxury cars face a particularly serious challenge in China from Toyota and its luxury brand, Lexus. After many years of paying limited attention to the Chinese market, Toyota decided two years ago to expand its presence in the country considerably.

Luxury car sales have stayed strong in China this year even as overall car sales have declined, making the Chinese market a top priority for global manufacturers. Lexus has gained market share while experiencing some of the fastest growth. BMW kept pace at least through April.

Mercedes has lagged behind Lexus and BMW, with its sales up only 3 percent in the first five months of this year compared with the same period of last year, according to the global consulting firm LMC Automotive. Audi has fared even worse, with sales of upper-middle-market cars weakening noticeably.

Beijing Auto and Geely are very different companies. Beijing Auto is under the tight control of the Beijing municipal government, which in turn is controlled by the national government. Geely, by contrast, is arguably one of the country’s most entrepreneurial automakers.

Geely was built by Mr. Li, a businessman in eastern China’s Zhejiang province. He got his start in the auto parts industry and now sits atop an empire that includes several domestic brands and Volvo Cars of Sweden.

Geely has revived Volvo since acquiring it from Ford Motor in 2010. Geely’s financial backing has allowed Volvo to develop new models, invest in electric vehicles and open a factory last year in South Carolina.

Daimler’s partnership with Mr. Li and Geely has been more distant. Hendrik Sackmann, a Daimler spokesman, said that the company communicated regularly with Mr. Li’s investment firm, Tenaciou3 Prospect Investment Ltd., just as it does with other large investors. Daimler and Geely also have a joint venture focused on developing the German carmaker’s Smart subcompact cars into an all-electric brand.

Zhejiang, Geely’s center of gravity, is also Mr. Xi’s political base. But it is unclear whether that gives him any extra influence or flexibility in decision making. In China, the private sector does what the Communist Party tells it to do. So if the Chinese government chooses to tell Geely and Beijing Auto to work together, they have little choice but to do so.

Having large stakeholders with ties to foreign governments is not new for Daimler. The Kuwait Investment Authority, a sovereign wealth fund, began acquiring shares in Daimler in 1964.

The Kuwaiti fund now owns about 7 percent of Daimler. Dieter Zetsche, who retired as the company’s chief executive in May, often spoke about how much he appreciated Kuwait’s support for Daimler’s management over the years, and at least publicly welcomed Geely’s unexpected acquisition of its stake last year.

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Beijing Auto Buys Stake in Daimler, Deepening Their Alliance

Westlake Legal Group 23daimler-facebookJumbo Beijing Auto Buys Stake in Daimler, Deepening Their Alliance Mergers, Acquisitions and Divestitures Germany Daimler AG China Beijing Automotive Group Co., Ltd. Automobiles

SHANGHAI — Beijing Automotive Group said on Tuesday that it would acquire a 5 percent stake in Daimler, deepening the German automaker’s ties to a vast but troubled car market.

The Beijing-based company said it would acquire shares and voting rights equal to a 5 percent stake. The two companies are already partners in China, where foreign automakers have long been required to strike comprehensive joint ventures with Chinese firms in order to make cars there.

Neither company immediately disclosed a transaction value. Based on Daimler’s current market capitalization, a 5 percent stake would be valued at roughly $2.8 billion.

Daimler, which makes Mercedes-Benz cars and other vehicles, said it welcomed the investment, which it said would reinforce their partnership. Daimler already owns a nearly 10 percent stake in Beijing Auto’s publicly listed unit, BAIC Motor.

“The Chinese market is and remains a crucial pillar of our success — not only for sales, but also for our product development and production,” Ola Källenius, Daimler’s chief executive, said in a statement.

China has become an important market for Daimler, accounting for 12 percent of its sales last year. More than one in four new Mercedes-Benz-branded cars are sold in China. Its ties to China tightened further early last year, when Li Shufu, the auto tycoon who leads Geely Auto of China, bought a nearly 10 percent stake.

Daimler’s China sales rose 5 percent last year over 2017, but a shadow hangs over the broader market. Car sales in China have plunged in recent months as consumers have shown signs of nervousness over slowing economic growth, as well as confusion over new emissions rules there.

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Ford and VW Agree to Share Costs of Self-Driving and Electric Cars

Westlake Legal Group 12fordvw-facebookJumbo Ford and VW Agree to Share Costs of Self-Driving and Electric Cars Volkswagen AG Ford Motor Co Electric and Hybrid Vehicles Driverless and Semiautonomous Vehicles Daimler AG Automobiles Argo AI

Ford Motor and Volkswagen said Friday they would team up to develop self-driving cars and share electric-car components, significantly broadening an existing alliance and illustrating how automakers are putting aside rivalries to manage the astronomical cost of new technologies.

The agreement calls for Volkswagen to purchase a stake in a Ford-backed start-up that is developing self-driving technologies, and for Ford to use electric-car components developed by Volkswagen.

As auto sales slump around the world, hard-pressed carmakers have little choice but to join forces to fend off Silicon Valley challengers and avoid obsolescence amid a fundamental change in the nature of transportation.

Underscoring the financial challenges facing the industry, Daimler, the maker of Mercedes-Benz cars, warned Friday that it will report a pretax loss for the second quarter of 2019.

But Volkswagen and Ford, which already cooperate on commercial vehicles and pickups, must show they can avoid the power struggles among managers and engineers that have doomed many other alliances.

Volkswagen, which sold more cars than any other company last year, is known for its insular hierarchical culture and has little experience cooperating with rivals. A previous alliance with Suzuki ended in 2015 with bitter feelings on both sides.

“Autonomous driving is a very, very expensive technology,” Ferdinand Dudenhöffer, a professor at the University of Duisburg-Essen in Germany, said in an email. “One has to invest today in order to make the first sales in 2030, maybe. Therefore it makes a lot of sense for Ford and VW to work together.”

Mr. Dudenhöffer questioned whether Herbert Diess, the chief executive of Volkswagen, and Jim Hackett, the chief executive of Ford, can make the compromises necessary for the alliance to succeed. Both are “alpha wolves,” Mr. Dudenhöffer said.

It may help that Ford and Volkswagen are dividing the labor to take advantage of each company’s strength. Ford is ahead of Volkswagen in autonomous driving, while Volkswagen is more advanced than Ford in electric cars.

Volkswagen has agreed to invest $2.6 billion in cash and other resources in Argo AI, a Ford-backed start-up that is working on sets of sensors, software and other technologies to enable cars to drive themselves. Volkswagen will fold its autonomous vehicle project, which is based in Munich, into Argo. The agreement values Argo at $7 billion.

In 2021 Ford aims to put Argo’s systems in driverless taxis and delivery vehicles in the United States. Volkswagen plans to use self-driving technology in its Moia ride-sharing service, a fleet of six-seat, battery-powered vans already operating with human drivers in Hamburg and expected to be introduced in other European cities.

In a separate agreement, Ford plans to build electric cars based on motors, batteries and other standardized components that Volkswagen has developed and is using in a new model called the ID.3, due next year. Volkswagen has said the car will sell for less than 30,000 euros in Europe, or $34,000, making battery-powered transportation more accessible to middle-income buyers.

The need for companies to share the cost and risk of developing autonomous vehicles has become more urgent because car sales are slowing in all of the major markets, including China, the United States and Europe.

“The financial investment is immense, and yet we don’t know when they will be in the marketplace or how they will make money,” said Michelle Krebs, a senior analyst at Auto Trader. “It’s not just the money. The talent pool for people developing these vehicles is small.”

Profits are falling across the industry. Daimler said Friday that it would report a pretax loss for the second quarter of 1.6 billion euros. A year earlier Daimler reported a profit of 2.6 billion euros.

The company, based in Stuttgart, Germany, said the loss was caused by the need to set aside 1.6 billion euros related to ongoing investigations in the United States and other countries into whether Mercedes diesel cars contained illegal emissions cheating software. In addition, Daimler will set aside 1 billion euros to cover the cost of recalling cars with defective airbags made by Takata, a Japanese firm.

Other big carmakers have already formed partnerships to develop cars that can drive themselves. Cruise, General Motor’s autonomous division, has gotten billions of dollars in financing from Honda and others. G.M. has put Cruise’s valuation at $19 billion.

Toyota has partnered in autonomous vehicles with Uber, the ride-hailing service. Luxury carmakers Mercedes-Benz and BMW have pooled their self-driving efforts. Several large automotive suppliers are also working on autonomous technology.

They face competition from well-financed Silicon Valley companies. Waymo, which is owned by Google parent Alphabet, has been working in the field for a decade and operates a test fleet of 600 self-driving taxis in Phoenix that it hopes to expand.

Estimates vary on how quickly cars will be able to operate without any human intervention, from a year or two to decades. For now, most of the self-driving test vehicles operate on public roads with one or even two safety drivers.

Founded in 2016, Argo has 500 employees and is operating test vehicles in Pittsburgh, where it is based, and Miami. Its chief executive, Bryan Salesky, formerly was part of the Google team working on self-driving cars. In 2017, Ford agreed to take an undisclosed stake in the company and invest $1 billion over five years. About 200 Volkswagen employees will join Argo.

Ford and Volkswagen previously agreed to cooperate in commercial vehicles for Europe and pickup trucks, and have said they were discussing cooperation in electric and autonomous vehicles.

For Ford and Argo, Volkswagen adds heft to the effort, said Mike Ramsey, a Gartner analyst. “Volkswagen is the world’s largest automaker by sales volume and has a huge global footprint,” he said. “The potential market for Argo technology is much bigger than with Ford alone.”

At the same time, Ford is scrambling to catch up in electric vehicles. The company hopes to introduce a slew of new electric models in the next few years. Using Volkswagen’s EV technology should speed the development effort. In April, Ford said it would invest $500 million in a start-up, Rivian, that is developing an electric pickup truck and sport-utility vehicle. Ford intends to use the underpinnings of Rivian’s vehicles to produce models of its own.

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