Automotive manufacturers may have a far more limited supply of new vehicles in the first quarter of 2020, as the outbreak of the Coronavirus continues to keep production factories closed across China.

According to automotive research firm IHS Markit, manufacturers are looking at a loss of as many as 350,000 vehicles in the first quarter, with government mandated shutdowns continuing to keep factories shut until at least 10 February in some regions of the country.

While some manufacturers have asked employees to work from home where possible to limit loss of production, factories in heavily affected areas, including the Hubei province where the outbreak originated, face lengthy operation delays.

Some industry analysts have even gone so far as to predict factories may remain closed until March, as the country continues to try and limit the spread of the disease. In this scenario, IHS has forecast the loss of approximately 1.7 million vehicles, a 32.3 percent decline from initial expectations before the virus was discovered.

“In this scenario, we might expect the potential of a China-wide supply chain disruption caused by parts shortages from Hubei, a major component hub and adjacent province closures for the majority of the month of February as a result,” said a spokesperson for IHS Markit.

Many global automotive manufacturers have been caught up in the delays, with Ford, GM, Fiat Chrysler and Honda just some automakers who have been affected by mandatory shutdowns.

Tesla, having just opened their newest production factory in Shanghai, are in the early stages of understanding the extent to which they will be delayed by shutdowns as well. The company has forecast a one to one-and-a-half-week delay in Model 3 production as a result.

The delays in manufacturing are also expected to slow production at assembly plants around the world, with several global car makers already noticing a decline in the availability of manufacturing parts.

South Korean brands Hyundai and SsangYong have were among the first brands outside of China to be affected by the shutdown due to their close proximity to the affected regions.

Fiat-Chrysler (FCA) have also revealed that one of their assembly plants in Europe may soon have no choice but to halt production as supply-chains remain shut-down.

David Leggett, automotive editor at GlobalData, a leading data and analytics company, said it was inevitable that shutting-down Chinese manufacturing and assembly plants would lead to broader economic consequences, consequences that were still yet to be fully realized.

“We have been waiting for this and it is an inevitable consequence of the deepening and spreading economic impact of the coronavirus, especially on manufacturing supply-chains. Many factories in the Wuhan and Hubei province have been on lockdown since the start of the Chinese New Year holidays,” said Leggett.

“The emerging problems for FCA outside of China are likely to be mirrored by other vehicle manufacturers and reflect both the long-run internationalisation of parts supply-chains and the predominance of ‘just-in-time’ lean manufacturing processes that keep inventory low.

“The next few weeks will be critical for automakers. The typical car is made up of 20,000 parts, and there is an elongated supply-chain of parts and sub-assemblies put together in complex sequence to create the finished vehicle.”

 Source: Intellasia | Coronavirus damages China’s auto industry as outbreak worsens

7 Feb 2020