The Brazilian automotive industry had not yet recovered from the last crisis and will again face a major challenge. This, however, is worldwide, and has a name: coronavirus. Mercedes-Benz, the brand that sells the most trucks in the country, expects the pandemic to cause at least a 20% reduction in the local market.
“We were not taken by surprise, but events were accelerating a lot. All the planning for the year was affected ”, says the company's president in Brazil, Philipp Schiemer.
In an interview with G1, the executive spoke about the reflexes of the pandemic, the new sales expectations and the challenges that the sector must face in the coming months.
- GM will cut hours and wages and suspend layoff contracts
- See the effects of coronavirus on the automotive industry
Not only Mercedes, but the entire automotive industry stopped because of the pandemic. Covid-19 changed not only the factories' routine, but also Schiemer's plans.
The executive has been at the Brazilian subsidiary of Mercedes for 15 years, and since 2013 he has held the presidency. Earlier this year, the company announced that it would return to Europe to take over as head of marketing and sales for the bus division in Germany.
But the job change announced a few months ago, as well as Schiemer's return home, scheduled for May, should be delayed. Before packing, the executive will have to deal with what could be the biggest crisis in the automotive industry.
Since March 20, the company's factories in Brazil have been stopped, and there is no concrete estimate of when production will resume or concessionaires will reopen.
For the president of Mercedes, this should not happen before May. Even so, according to him, it is necessary to wait about 1 month to have a better idea of what will be the new sales estimate for commercial vehicles in 2020.
At the beginning of the year, Schiemer's forecast for the truck market in the year was 110,000 units, about 10% more than the 101,300 units issued in 2019.
Now, in the most optimistic scenario, the president of Mercedes-Benz believes that sales will fall by 20%, the result of two months of sales practically zeroed.
If this period is extended, the fall should be almost 10% more for each month that the industry does not sell trucks.
Philipp Schiemer, President of Mercedes-Benz do Brasil – Photo: Disclosure
'Banks are shy'
The solution, for him, lies in conversations with the government and banks. “We have a dialogue with the Ministry of Economy and with BNDES (National Bank for Social Development). Basically, we are not looking for subsidies, but we are showing the government the need for liquidity that the sector needs. Not just the automakers, but about suppliers and resellers ”.
The executive demands a greater role in the supply of credit by banks in the face of uncertainty. At the end of March, the Central Bank of Brazil authorized the release of more than R $ 1 trillion to financial institutions.
The complaint is the same as that of Argentines Pablo Di Si and Carlos Zarlenga, of Volkswagen and Chevrolet, respectively, in an interview given to the newspaper O Estado de S. Paulo, and also of Luiz Carlos Moraes, president of Anfavea, the manufacturers' association.
“Today, liquidity is difficult in the market, it is very expensive. The banks are raising interest rates, they are very shy in providing credit, ”said the president of Mercedes.
The risks, according to the executive, of credit retention, are the breakdown of smaller companies, such as auto parts suppliers.
"The game is the rule, but we are warning the government that, if we do not find a solution, many companies will go bankrupt," he added.
Febraban, an association of banks, admits that there is a "challenge" to meet the demand for credit from large companies, which would have grown up to 10 times.
So far, the financial sector claims that it released R $ 40 billion in credit, but aimed at companies that earn up to R $ 10 million per year.
Without concrete actions on the part of the banks, for now, and in the scenario of global crisis, Schiemer believes that not even the headquarters of the companies will be able to help their branches with financial problems.
“The time when the headquarters help the branches is over. Not only for the coronavirus, but for the high investments required ”.
The problem, for him, is the same faced in Brazil. "Everyone today is looking for liquidity to endure the coming months," he said.
For that, Schiemer has already said that he will cut "all non-essential expenses". However, the investment of R $ 2.4 billion, announced in 2017, effective until 2022, is maintained.
"We have not frozen any projects. But, this will be a discussion after the most acute phase of the crisis. Certainly, this means the postponement of some projects," he said, without mentioning which ones.
This strategy must also be adopted by FCA, owner of brands like Fiat and Jeep, led by Italian Antonio Filosa. "Some projects will be postponed for up to 1 year. What was a 2018-2024 plan, became 2018-2025", he said, on the last day 3.
Mercedes-Benz factory in São Bernardo do Campo – Photo: Disclosure
In order to get through the crisis without depending on Germany, Mercedes is negotiating the easing of its employees 'employment contracts with the metalworkers' unions in the regions where it has a factory.
In the first 20 days of stoppage, the company resorted to hour banks and collective vacations.
“We are trying to layoff and workload reduction. Layoff is more suitable for production. On the administrative side, working hours are the best alternative, ”he said.
So far, General Motors and Toyota have announced changes to their workers' regimes, including layoffs and reduced hours and wages.
Regarding his departure from Brazil and his succession at the head of the Brazilian subsidiary, Schiemer says that the changes should only happen when the flow of trips normalizes.
His successor, Karl Deppen, has traveled to the United States, Turkey and Japan, but currently holds a position at the headquarters in Germany.
“We have to see when my successor can be in Brazil. This is not currently possible. I think there will be a postponement, but the date has not been set ”, said the current president.
“I insist on delivering the company in the best possible way. For us, it is an obligation to go through more of this storm ”, he added.