China’s auto industry has halted operations on the Coronavirus related shutdown in China. This shutdown has caused a disruption in auto parts supply chain in global markets.
China’s local governments have already extended the Lunar New Year holidays to contain the spread of Coronavirus. Enterprises in cities including Shanghai, Beijing, Guangdong, Fujian, Zhejiang, Jiangsu and Chongqing will remain shut till February 9 at the minimum.
Of these, the city of Guangdong accounts for 12.8pc of light vehicle production and Hubei accounts for 9pc of Chinese auto production and over 3.5pc of demand.
Hubei province is home to many small- and medium-sized parts suppliers. Hubei produced 2.2mn automobile units in 2019 amounting to 9pc of China’s total production. Wuhan, the epicentre of Coronavirus and Hubei’s capital contributed 70pc to the province’s auto output, according to China Passenger Car Association.
With this outbreak, experts estimate a decline of 2-10pc in auto output in the Q1 of 2020 from the prior year. After the Lunar New Year holidays, auto production was to resume in early February. The Coronavirus outbreak, however, extended the reopening till Feb 10.
Industry officials and global analysts believe that annual output is unlikely to be affected despite a decline in sales in the short-term.
Amongst the major automakers, Toyota Motor Corp halted operations in China till Feb 9 and restricted travel to Hubei province. Hyundai motors in South Korea became the first global car manufacturer to halt operations outside China due to supply chain disruption.
Germany based auto parts manufacturer Webasto has shut its headquarters till Feb 11 after a few of its employees were diagnosed with the Coronavirus. Tata Motors expects the outbreak to affect its production and profits. Ssangyong Motors also idled its plant in the South Korean city of Pyeongtaek till Feb 12. In India, car manufacturers said that supply of parts has ground to a halt as a result of Coronavirus.