Coronavirus Impacts the Global Automotive Industry


The automotive industry has been particularly hard hit due to the Coronavirus crisis. Hubei province, the epicenter of the outbreak, is one of the five major automotive manufacturing centers in China, accounting for almost 9% of China’s vehicle production. It’s also a hub for auto parts production and domestic and foreign automakers. Plant closures have already upended global automotive supply chains. And with stocks diminishing rapidly, a global shortage of auto parts looms which will affect production volumes in 2020.


China is a main exporting country for automobile components, accounting for 37.1% of Japan's total import value in 2019 and 31.1% of that of South Korea. Although automotive components exported from China are mostly peripheral such as rubber pedals, car door springs, fabrics used in airbags and wiring harness, China-based makers' short supply due to the outbreak has affected car production in Japan and South Korea.


An assortment of automakers operating in or near Hubei— including foreign makers Nissan, General Motors, Volkswagen, Kia, Peugeot, Honda, and Chinese domestics such as Dongfeng — were forced to halt production. Soon, manufacturers in other parts of the country, including China’s automotive center, Shanghai, were feeling the impact.


Since automotive components are of a large variety and carmakers' certification takes a long time, it is impossible to shift orders in the short term. Thus, China-based makers' short supply is likely to impact other car factories in the next several weeks. Although some automotive plants in China are reopening as the worldwide expansion of the coronavirus continues, but sales in China so far in February pretty much fell off a cliff.


Automotive suppliers are warning car companies they could run out of certain parts used in North American factories in coming weeks, with special concern over potential shortages of electronic components, industry executives and attorneys say. Hoping to stave off factory work stoppages, some manufacturers have taken the unusual and costly step of flying.

In this context and as a result of closing factories of electrical parts in china, Hyundai -- which with its affiliate Kia ranks as the world's fifth-largest auto manufacturer -- has run out of the wiring harnesses that connect vehicles' complex electronics.


The top manufacturers of automotive ICs have been hit by Coronavirus like Bosch “the world’s biggest auto components supplier” as its chief executive warned that coronavirus could impact its global supply chain, which is heavily dependent on China. On the other hand, Bosch has canceled or postponed all travel to and from China until the end of February as the UK confirmed its first coronavirus cases have reached the Western end of Europe.


Foxconn, the world’s largest electronics contract manufacturer, is China’s largest private sector employer. It assembles the iPhone and a broad range of other consumer electronics gadgets, but also makes a range of electronics components and has diversified into manufacturing services ranging from auto electronics to medical devices to industrial robots.
Hon Hai Precision Industry reported an 18.1 per cent drop in monthly revenue for February compared with the same month last year for Foxconn sales.


The broader impact in China, which has ordered quarantines and taken other steps to contain the epidemic can be seen in the 92% decline in car sales during the first half of February, according to the China Passenger Car Association.


Here is a list of automotive companies which face the impacts on their supply chain:


Fiat Chrysler Automobiles:
Fiat Chrysler said it plans to halt operations at its factory in Serbia due to a lack of parts from China because of the coronavirus.


MTA S.p.A. Advanced Automobile Solutions:
The Italian manufacturer MTA, which makes electrical parts for cars, has been forced to close its factory in Codogno after the Covid-19 outbreak in northern Italy. It said the closure would have a knock-on effect on production at Fiat Chrysler’s plants in the country before spreading to other carmakers across Europe.


Dongfeng Motor Corporation:
Dongfeng Motor, China’s second-largest carmaker based in Wuhan, will post lower profits as a result of the extended production break arising from the deadly coronavirus outbreak as analysts say.


Renault Group:
Renault has extended the suspension of its industrial activities in China into March because of the effects of the coronavirus outbreak. Renault's factory in Wuhan, which it operates with Dongfeng in a joint venture, will be closed until March 10.


PSA Group:
PSA's joint venture with Dongfeng Motor, called DPCA, has two assembly plants in China, in Wuhan and Chengdu. The plants produce Peugeot and Citroen models for the Chinese and other Asian markets. It also makes engines and transmissions at a factory in Xiangyang, some of which it exports to Europe. PSA has extended the suspension of its industrial activities in China into March because of the effects of the coronavirus outbreak.


Nissan Motor Co., Ltd:
Nissan Motor Co said it would keep its plants in Xianyang, Hubei Province, and Zhengzhou, Henan Province, shuttered after Feb. 24, when it had planned to resume operations. It did not give a new date for reopening.


Honda Motor Co., Inc:
Honda Motor Co will temporarily cut back production in Japan due to difficulty in sourcing parts from China amid the coronavirus outbreak. The cutbacks, which will last for a few days beginning early March, will see a reduction in output by a few hundred vehicles at two plants in Saitama Prefecture. Japan’s third-largest automaker has seen its profitability declined by more than half in the past two years, led by a series of quality-related issues.


Toyota Motors:
Toyota Motor Corp. on Wednesday said that operations at its plants in Japan may be affected by supply chain issues linked to the new coronavirus outbreak in the coming weeks, as the global outbreak gathers pace.


Aptiv PLC:
Automotive technology supplier Aptiv PLC said the coronavirus outbreak in China has hurt revenue by $150 million to $200 million and operating income by $60 million to $80 million.


Hyundai Motors:
Hyundai Motor Company has shut down one of its car factories in South Korea after it was revealed an employee had contracted the novel coronavirus. The company has started disinfection procedures in areas where the employee worked and quarantined five co-workers who made close contact with the infected employee.


Mahindra and Mahindra:
M&M has reported a 42 percent decline in total sales at 32,476 units in February.


MG Motor India:
MG Motor India too reported lower retail sales of 1,376 units in February, hit by component supply constraints from China and other locations.


TATA Motors:
TATA Motors said that vehicle production is affected due to the Coronavirus outbreak in China.


Tesla, Inc:
Tesla has shed 25% at the end of February due to coronavirus outbreak weighs on the broader market.
There could be further pain ahead of China's struggling automotive industry and Tesla, which had to shut its Shanghai Gigafactory in early February due to the virus outbreak.


Mitsubishi Motors Corp:
Mitsubishi Motors has postponed the restart of its factory with Guangzhou Automobile Group in Hunan province until 27 of February due to the coronavirus outbreak.


KIA Motors:
Kia, which manufactures several vehicles on similar platforms as Hyundai vehicles, has had to cut down production at its plants in Korea while suspending work in China.


Vauxhall:
Coronavirus impact began to appear at Vauxhall as Two workers at Luton's Vauxhall plant have been restricted from coming into work following a weekend trip to Italy as a precaution against possible Coronavirus contamination.


General Motors Corporation:
General Motors has a big presence in China through several joint ventures with local companies. A GM spokesperson told Car and Driver that it restarted production at some plants in China on February 15, but its plants in Hubei province, the epicenter of the coronavirus, will be kept closed until at least March 10. Even with all these closures, GM says it expects the coronavirus will have "no impact" on its production plants in the U.S.


Magna International Inc:
Most of Magna International’s plants in China have resumed operations, albeit, at reduced capacity, CEO Don Walker told reporters following the company’s investor conference on Thursday. Magna has 54 manufacturing plants located in China employing 18,750 people. Walker said there are still “a couple” plants down in Wuhan, the city at the center of the coronavirus outbreak. The factories that are back up and running are operating at between 50 to 80 percent capacity.


Valeo:
Valeo, the French supplier, is an automotive supplier and partner to automakers worldwide. has three sites in the Wuhan area. Valeo says it has not suffered any operational impact from the outbreak of the coronavirus in Wuhan, although it continues to follow the situation closely while shutting for Chinese New Year.


BMW AG:
Around 150 employees of BMW in Munich have been ordered to ‘self-quarantine’ after a worker in the carmaker’s research and development center tested positive for the Covid-19 coronavirus strain.


Bosch:
Also, the top manufacturers of automotive ICs have been hit by coronavirus like Bosch “the world’s biggest auto components supplier” as its chief executive warned that coronavirus could impact its global supply chain, which is heavily dependent on China.


Foxconn:
Foxconn, the world’s largest electronics contract manufacturer, is China’s largest private sector employer. It assembles the iPhone and a broad range of other consumer electronics gadgets, but also makes a range of electronics components and has diversified into manufacturing services ranging from auto electronics to medical devices to industrial robots.


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