BMW in dash for cash as German car sales plummet amid coronavirus chaos

The logo of German car manufacturer BMW is seen on the company headquarters in Munich, Germany, (Reuters/File Photo)
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Updated 06 April 2020

BMW in dash for cash as German car sales plummet amid coronavirus chaos

  • Chancellor Angela Merkel said this week that restrictions on public life would be extended to at least April 19

FRANKFURT: BMW is following other German carmakers in pumping up its financial liquidity to ride out the coronavirus crisis, its chief executive said Friday, as car sales in the auto-mad nation booked their steepest plunge in almost 30 years in March.
“Circumstances as serious as this can threaten the existence of even a large company,” BMW boss Oliver Zipse said in an interview circulated to staff.
“We have already introduced large-scale measures, in particular to secure our liquidity,” Zipse added, calling the steps an “absolute priority” but without going into details.
High-end competitor Daimler, which builds Mercedes-Benz cars, said Thursday it had agreed a new 12-billion-euro ($13 billion) credit line with banks, “increasing its financial flexibility.”
A hint at the pressure on carmakers came from Volkswagen boss Herbert Diess last week, when he said virus-imposed shutdowns were costing the sprawling 12-brand giant up to two billion euros per week.
Official data showed new registrations of cars on German roads plunging in March to their lowest in almost three decades.
Sales tumbled 38 percent year-on-year to just over 215,100, according to the KBA vehicle licensing authority.
“Necessary health policy measures, like the massive limits on public life, closure of car dealerships and limited ability to work in the licensing offices” had braked the car trade, the VDA carmakers’ federation said.
Domestic demand fell 30 percent, while foreign orders were down 37 percent.
In a quarterly comparison, sales in January-March were down 20 percent year-on-year.
“April is likely to be even more catastrophic,” analysts from consultancy EY predicted.
In European virus epicenter Italy, where lockdown restrictions are even harsher, transport ministry figures released Thursday showed sales collapsing by more than 85 percent year-on-year in March.
At just over 28,300 cars registered, Italian sales were “at a level comparable with the early 1960s, when mass car ownership in our country was just getting started,” experts at car industry research center Promotor commented.
“Forecasts for the coming months call for similar or even worse falls until the crisis is over,” they added.
In Germany, “even if the acute crisis were overcome in summer, the economic and social consequences — massive increase in unemployment, plunges in income, bankruptcies — will continue to squeeze demand strongly,” EY predicted.
Ratings agency Moody’s expects the global auto market to contract 14 percent in 2020.
Up to 100,000 of the roughly 800,000 jobs in Germany’s massive auto sector could be at risk, according to recent estimate from University of St. Gallen expert Ferdinand Dudenhoeffer.
To weather the impact of the coronavirus restrictions, major manufacturers like Volkswagen, Mercedes-Benz parent Daimler and BMW have closed factories and placed tens of thousands of workers on government-funded shorter hours schemes.
Chancellor Angela Merkel said this week that restrictions on public life would be extended to at least April 19, including a ban on gatherings of more than two people and the closure of many businesses such as restaurants.


Canadian firm pulls out of Carrefour takeover after France insists ‘No’

Updated 16 January 2021

Canadian firm pulls out of Carrefour takeover after France insists ‘No’

  • Carrefour has more than 12,300 stores in more than 30 countries and employs 320,000 people worldwide
  • Canada's Couche-Tard has offered to take over the French supermarket giant for 16 billion euro ($19.5 billion)

PARIS: Canadian convenience store chain Couche-Tard has reportedly pulled out of a multi-billion euro takeover of supermarket giant Carrefour after the French government said it would veto the deal.
Negotiations over the 16 billion euro ($19.5 billion) deal ended after a meeting between the French Minister of the Economy Bruno Le Maire and the founder of Couche-Tard Alain Bouchard, Bloomberg news agency said, citing sources.
French ministers had insisted Friday they would not agree to the takeover because it could jeopardize food security, an even more important consideration given the coronavirus pandemic.
In an attempt to reassure ministers, Bouchard had promised to invest billions in Carrefour, said he would maintain employment for two years and that the group would be listed on the Paris Stock Exchange in parallel with Canada, Bloomberg reported.
Contacted by AFP, neither Couche-Tard nor Carrefour had confirmed the information on Friday evening.
Although talks had stopped, anonymous sources cited by Bloomberg said negotiations could resume if the French government changes its position.
But on Friday, France’s Economy Minister made his choice public, telling BMTV and RMC: “My position is a polite, but clear and definitive ‘No’.”
“Food security is a strategic consideration for our country and one does not just hand over one of the large French distributors like that,” Le Maire said.
“Carrefour is the biggest private sector employer in France with nearly 100,000 employees,” he noted, and the group accounts for 20 percent of the food distribution market in the country.
The French statements have not convinced the Canadian government.
A Canadian federal source said while they could understand concerns over allowing a foreign firm to take over such a large national employer, concerns over food security were unsubstantiated.
“But we cannot accuse a leading Canadian company like Couche-Tard of endangering the food sovereignty of an entire country,” the source, who requested anonymity, told AFP.

'Food sovereignty'
On Wednesday, Couche-Tard submitted a non-binding offer for Carrefour, valuing the group at more than 16 billion euros ($19.5 billion).
Le Maire made clear immediately that he was not in favor of a deal involving “an essential link in food security for the French, of food sovereignty.”
The government’s reaction had caused “surprise” at Carrefour itself, according to sources who said the comments were “premature” given that merger discussions had barely begun.
“We haven’t decided yet whether the interest shown is attractive for us,” one company official said on condition of anonymity earlier in the week.
Carrefour has more than 12,300 stores of various formats in more than 30 countries and in 2019 generated a net profit of 1.3 billion euros ($1.5 billion) on revenue of 80.7 billion euros ($97.4 billion).
It employs 320,000 people worldwide.
Couche-Tard has a worldwide network of more than 14,200 stores and earned a net profit of $2.4 billion on sales of $54 billion in its last complete year.
In the United States and several European countries, as well as in Latin America and southeast Asia, it operates under Circle K and other brands.