German auto plant restarts pave way for diesel boost

Germany's Man Truck and Bus is the latest vehicle manufacturer in the country to announce a restart of production, paving the way for a boost to domestic diesel demand from the logistics firms that supply parts and raw materials.

Man said it will resume production at its plants in Munich, Salzgitter and Nuremberg from 27 April after a six-week halt. It comes after German car makers Volkswagen and Daimler restarted production earlier this week in the wake of the German government's decision to gradually ease Covid-19 containment measures.

As a result, logistics companies serving the German automotive industry expect increased demand for their services from this week, according to a survey by the Federal Office for Goods Transport (BAG).

Production at Man's main plant in Munich was halted at the end of March because of bottlenecks in the delivery of vehicles and the supply of parts and components. The production sites in Nuremberg and Salzgitter were shut down at the same time.

The company said the biggest challenge for a successful production restart is to ensure that the supply of parts remains secure. Man's suppliers are spread around the EU.

Since the middle of last month, German haulage and logistics firms have seen a massive drop in orders from the automotive industry, leading to a sharp drop in road freight transport in Germany.

The average mileage of trucks subject to tolls from 23 March to 17 April was 11.4pc below pre-crisis levels from 1 January to 22 March, according to the BAG.

The restart of German vehicle manufacturing plants is also a positive sign for blenders that manufacture engine oils and industrial lubricants. Factory fill engine oil demand will rise as the manufacturing of passenger car and truck engines resumes.

Consumption of industrial lubricants will rise as factories gradually ramp up production. The transportation of components between sites will also lead to the increased requirement for engine oil changes, boosting lubricant and base oil demand.

By Marc Hauschild and Catherine Caulfield