June 30, 2020 / 11:21 AM / 13 days ago

UPDATE 1-Czech car production to slide 20% in 2020 due to coronavirus - auto group

(Adds details on production, comments)

PRAGUE, June 30 (Reuters) - Czech car production is expected to drop by 20% in 2020 due to closures caused by the coronavirus pandemic, putting the country’s biggest manufacturing and export sector at risk of job cuts, the Automotive Industry Association said on Tuesday. In 2019, carmakers Skoda Auto, TPCA and Hyundai produced 1.46 million vehicles in the Czech Republic. Together with output from almost 140 other manufacturers, that made up about 10% of its gross domestic product.

The association estimated that revenues in the automotive sector, which accounts for 23% of industrial output in the heavily industrialised and export-oriented economy, would fall by at least 215 billion crowns ($9 billion) this year, or 19%.

The car industry employs around 180,000 people directly and about half a million when all suppliers are counted.

So far, only a few hundred jobs have been cut, but the government needs to extend its job-support programme to keep more workers on the payroll, the association’s President Bohdan Wojnar said.

“At the moment, we (recognise) the companies’ efforts to keep people on board. However, this situation is very fragile and it is in the state’s utmost interest to help, especially in terms of employment,” Wojnar said.

In April, when mostly voluntary rather than government-mandated closures were at their most severe, car production plunged 88.5% to a level last seen in 1994, when the economy was still in transition from the state-dominated era, Wojnar said.

The sector is very sensitive to outside demand, with exports accounting for 84% of total revenues. One third of exports go to Germany, which is the Czech Republic’s main trading partner. ($1 = 23.8940 Czech crowns) (Reporting by Robert Muller; Editing by Jan Lopatka and Jan Harvey)

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