German Carmakers Fear Output Snags From Virus Border Checks

Travel restrictions at Germany’s border with the Czech Republic risk severing automotive supply lines that could spark a wave of production stoppages, according to Germany’s VDA automaker association.

From Sunday, only German citizens and residents in the country are allowed to enter Germany from the Czech Republic and Austria’s Tyrol region, two zones where more infectious variants of coronavirus are widespread.

German Carmakers Fear Output Snags From Virus Border Checks

BMW AG and Volkswagen AG operate plants in Bavaria and Saxony that depend on car parts particularly from Czech Republic, which exports about a third of its vehicles and components to Germany. Entry restrictions and delays may disrupt delicate supply lines that can lead to a halt in auto production in a matter of hours. Some of the sites, like BMW’s Dingolfing, it’s biggest factory in Europe, also employ workers residing in Czech Republic.

High Alert

Germany is on high alert for more infectious strains as it moves to gradually reopen Europe’s largest economy. German Chancellor Angela Merkel last week warned that aggressive mutations will gain the upper hand in the country sooner or later, threatening to destroy progress made in containing the pandemic.

The highest incident rate in Germany is in Tirschenreuth on the Czech border. The municipality has 316.5 cases per 100,000 people, compared with the national figure of 58.9, according to the RKI public-health institute.

BMW’s plants were operating normally as of Monday morning, and had stocked enough parts, a spokeswoman said. She declined to say if the company expected shortages or outages later this week. VW said it wasn’t currently experiencing production problems because of the border controls.

Bigger Inventories

The Czech Automotive Industry Association “hadn’t heard of acute disruptions so far,” a spokesman said. Many companies have begun to hold bigger inventories, he said, after last year’s upheaval during the first wave of coronavirus lockdowns.

Still, queues of cars and trucks stretched 15 kilometers (9.3 miles) Monday, and the Czech highway authority warned of a traffic collapse at the main highway linking Prague and Nuremberg.

BMW also has factories in Regensburg and Wackersdorf close to the Czech border and makes engines in Steyr, Austria. Both BMW and VW make cars in Leipzig, and VW produces the ID.3 electric hatchback in Zwickau.

“We are watching the situation closely and hope that parts are able to move smoothly across the border,” a VDA spokesman said.

Chip Shortage

Snares in supply chains due to the restrictions would stoke a fresh headache for Germany’s automakers, already fighting a global shortage of semiconductor chips. Ford Motor Co. and VW have both throttled production at German plants due to a lack of chips.

There are exceptions to the border controls, including for health, logistics and seasonal farm workers, Stephan Mayer, a deputy interior minister from the Bavarian CSU party, said Monday in an interview with Deutschlandfunk radio. Others are also being discussed for companies that rely on workers from Tyrol or Czech Republic.

©2021 Bloomberg L.P.

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