Automobile parts supply disruptions in China are expected to hit the operations of car manufacturers globally, as Beijing battles to contain the coronavirus outbreak, further delaying restarts for some firms.
“Unless the virus is plugged very soon, I cannot help but think we could be shut in four to six weeks,” one UK-based aluminium alloy producer said. “Not because of anything we do, but because automakers will be shutting down on a lack of Chinese parts.”
Beijing extended the lunar new year holiday by three days to 2 February as the coronavirus outbreak escalated, but most local governments issued directives to delay the restart of operations to 10 February. Further delays are expected in Hubei province, the epicentre of the coronavirus outbreak, where the situation is being closely watched by the authorities.
Hubei is also a major hub for original equipment manufacturers (OEMs), which supply much of the world’s automobile parts.
German OEM Webasto, which builds roofing systems, air conditioning and heating for automobiles, also operates one of its largest plants by capacity in Hubei capital Wuhan. Eight staff members in Germany were tested positive for the coronavirus and Webasto’s headquarters in Stockdorf has just reopened today following a two-week shutdown. But the firm did not state when it will restart operations in Wuhan.
French OEMs Valeo and Faurecia also operate plants in Hubei. Chinese OEM Camel Group will restart operations on 14 February, as directed by the Hubei provincial government.
Many car manufacturers restarted operations in China on 10 February after the extended shutdown, but some firms have further delayed work resumption.
Japanese automotive manufacturer Toyota and South Korea’s second-largest manufacturer Kia will be restarting operations on 17 February, according to analysis by Guosheng Securities in China.
Chinese-Japanese joint-venture car manufacturer Nissan Dongfeng is headquartered in Wuhan. The firm has yet to decide on a restart date.
“The automotive supply chain is more complicated, and it is greatly impacted by logistics. Furthermore, the inventory level of vehicle parts held by car manufacturers is low, and this has affected the degree of resumption,” Guosheng Securities said.
Extensive travel restrictions have further compounded logistical challenges in China, which is already under severe strain.
“We’ve stopped offering to China because we don’t know if the logistics work yet. Some material is on the water but the ports are congested and you can’t move material,” one scrap supplier said.
“The main issue is how China gets the system started again. Most logistical supply chains have been cut. Ports are congested, highways are blocked. Ships are not coming back as expected and there’s a shortage of containers in Europe.”
Yoke Wong and Jethro Wookey