March 22, 2020 / 8:58 PM / 2 months ago

A quarter of Czech auto sector closed, 60% cutting output-industry group

PRAGUE (Reuters) - A quarter of the Czech auto sector will be shut by Monday while another 60% will have markedly cut production, the industry’s lobby group said on Sunday, calling for fast-track measures to keep afloat a sector directly employing 170,000 people.

The Auto Industry Association (AIA) said companies were laying off contractors and the crisis stemming from the coronavirus outbreak was pressuring core jobs.

The auto sector makes up around 9% of economic output and accounts for about 23% of exports for the Czech economy, which relies heavily on manufacturing and selling goods abroad.

“Firms with limited or suspended production will have great problems with cash flow and need immediate assistance,” the AIA said in a statement.

The Czech car industry is led by Volkswagen’s Skoda Auto, while Hyundai and a joint venture between Toyota and PSA also have assembly plants. All three have announced shutdowns.

The industry association called on the government to immediately waive advance payments of payroll taxes, including social insurance paid by both employers and employees.

It also advocated the government should partly subsidise wages to avoid layoffs and for the central bank to agree with commercial banks a delay in loan payments.

The Czech Republic had 1,120 cases of coronavirus infection by Sunday night, up 13% over the past 24 hours, with no deaths. The country has introduced some of Europe’s strictest measures to limit the spread of the infection.

Reporting by Jan Lopatka; Editing by Michael Kahn and David Holmes

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