Audi is stopping production for two-three weeks next Monday

HUNGARY - In Brief 17 Mar 2020 by Istvan Racz

---

The Hungarian subsidiary of Audi announced today that it will gradually close down production this week and remain fully closed for the subsequent two-three weeks, due to the problems generated by Covid-19. These problem partly come from falling demand and partly from the increasing shortage of components. As regards the latter, it is mainly not about the well-known problem of inadequate shipments from China, but increasingly about the closure of national borders within Europe. Car manufacturing is typically an industry with much of transportation need, as components and semi-finished products keep travelling back and forth between various production sites, where different phases of production are carried out. Although in principle, the transportation of goods can freely continue across borders even now, in practice the fact that border checks are now introduced within the Schengen zone hits back on road transportation, whereas the related capacities of the railway network happen to be limited.The direct impact of Audi's closure on annual GDP is estimated at -0.2%-point, and the total impact may be -0.3% or even more. In our monthly report that was out yesterday, we pointed out tourism, electronic equipment and the car industry and its supply chain as the main areas to be affected by Covid-19. However, transportation is also a sector which is likely to suffer, as regards domestic turnover, export and import deliveries and transit turnover alike. In addition to corporate taxes, VAT, customs duties etc., the government is also collecting about 0.6% of GDP worth of revenue from toll fees, mainly from road transportation. This revenue is also likely to be hit this year.We ...