Automotive & Cars Corona EU

EU Measures to Support Auto Industry in Corona Crisis

The financial impact of the COVID-19 crisis on the automotive industry is severe. Both production and sales of motor vehicles have come to a sudden halt in most of Europe and other regions in the world.

Workers who sit at home see their income reduced as their (temporary) unemployment benefits are lower than their salaries, sometimes significantly.

At the same time, their monthly bills for rent and energy as well as their repayments of loans and mortgages remain unchanged.

Without new revenues, many vehicle manufacturers and supply will face significant liquidity problems in the short to medium term.

Available levels of cash vary across the sector, but several companies could face shortages within a matter of months.

The automotive sector is highly capital intensive.

Companies rely on frequent refinancing to fund their operations.

In the current situation, it will be difficult for companies to obtain new financing from commercial banks and/or investors.

Measures at EU level

At EU level, the European Central Bank (ECB), the European Investment Bank (EIB) and the European Commission (EC) have already taken various measures to support affected workers and companies.

European Central Bank

The ECB essentially aims to maintain liquidity in the financial system by purchasing bonds issued by Member States and commercial companies and by relaxing various requirements imposed on commercial banks.

Pandemic Emergency Purchase Programme

The ECB adopted a Pandemic Emergency Purchase Programme on 19 March.

This enables the ECB to purchase sovereign bonds from all EU Member States under flexible conditions as well as commercial papers of sufficient credit quality.

The programme has an envelope of €750 billion and runs until the end of the year.

The ECB has declared its willingness to increase the size of its asset purchases and adjust their composition, by as much as necessary and for as long as needed.

Monetary policy package

The ECB also adopted a monetary policy package on 12 March.

Under this package, the ECB will conduct additional longer-term refinancing operations to provide immediate liquidity support to the euro area financial system.

In addition, it will apply considerably more favourable terms (lower interest rates) during the period from June 2020 to June 2021 to all longer-term refinancing operations outstanding during that time.

These operations should support bank lending to those affected most by the spread of the coronavirus, in particular small and medium-sized enterprises.

Third, the ECB add a temporary envelope of additional net asset purchases of €120 billion until the end of the year, ensuring a strong contribution from the private sector purchase programmes.

Finally, it temporarily relaxed the requirements imposed on commercial banks to hold specific levels of capital and liquidity buffers.

This should enable banks to make larger funds available for lending.

European Investment Bank

On 16 March, the EIB proposed a plan to mobilise up to €40 billion of financing.

This will go towards bridging loans credit holidays and other measures designed to alleviate liquidity and working capital constraints for SMEs and mid-caps.

The proposed financing package consists of:

  • Dedicated guarantee schemes to banks based on existing programmes for immediate deployment, mobilising up to €20 billion of financing.
  • Dedicated liquidity lines to banks to ensure additional working capital support for SMEs and mid-caps of €10 billion.
  • Dedicated asset-backed securities (ABS) purchasing programmes to allow banks to transfer risk on portfolios of SME loans, mobilising another €10 billion of support.

To date, the EIB has not designed any programme specifically to support the transport sector. It is recalled that such a ‘European Clean Transport Facility’ was created at the time of the financial crisis in 2009.

European Commission

The European Commission essentially aims to relax existing rules (state aid, Stability and Growth Pact) to give Member States more opportunities to provide financial support to the economy.

State aid

The European Commission issued a temporary framework for state aid measures to support the economy in the current COVID-19 outbreak on 20 March.

This framework will make it possible for Member States to offer:  

  • Direct grants, selective tax advantages and advance payments: Member States will be able to set up schemes to grant up to €800,000 to a company to address its urgent liquidity needs.
  • State guarantees for loans taken by companies from banks: Member States will be able to provide State guarantees to ensure banks keep providing loans to the customers who need them.
  • Subsidised public loans to companies: Member States will be able to grant loans with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.

This framework complements the earlier Communication on a coordinated economic response to the COVID-19 outbreak.  

The latter Communication enables Member States to make generally applicable changes in favour of businesses (eg deferring taxes, or subsidising short-time work across all sectors), which fall outside state aid rules. 

The Commission has already started to approve various measures taken by national governments including Germany, France, Italy, Portugal and Denmark.

For more details, see:

Stability and Growth Pact

The Commission proposed to the Council of Ministers the activation of the general escape clause of the Stability and Growth Pact (SGP) on 20 March.

Once endorsed by the Council, it will allow Member States to undertake measures to deal adequately with the crisis, while departing from the budgetary requirements that would normally apply under the European fiscal framework.

Cohesion funds

The Commission proposed to the European Parliament and the Council to direct €37 billion under EU cohesion policy to the fight against the coronavirus crisis.

To this effect, it plans not to request Member States to refund unspent pre-financing for the structural funds in 2020.

This amounts to about €8 billion from the EU budget, which Member States will be able to use to supplement €29 billion of structural funding across the EU.

Circulation of Goods: EU Green Lanes

The Commission issued new practical advice on how to implement its Guidelines for border management, in order to keep freight moving across the EU during the current pandemic.

Within these Guidelines the Commission has proposed new ‘EU Green Lanes’ where streamlined procedures should be implemented to accelerate intra-EU transport of goods.

Amongst the other measures proposed, the Commission recommends that Member States take action to ensure the free movement of all workers involved in international transport, whatever the transport mode.

In particular, rules such as travel restrictions, and mandatory quarantine of transport workers not displaying symptoms, should be waived.

For more details, see:


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Coronavirus: overview of EU measures to support industry

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