Foreign auto makers suffer rising losses in crisis-hit Wuhan city: industry insider

By Yin Yeping and Li Xuanmin Source:Global Times Published: 2020/2/23 15:43:39

A view of GAC Honda's booth at an auto show in Jinan, East China's Shandong Province, on September 8, 2019. Photo: IC

Foreign auto and auto parts makers like Honda, Nissan, General Motors and Renault, operating in Wuhan, Central China's Hubei Province, each may suffer 40 million yuan ($5.69 million) in losses a day due to the production pause amid the coronavirus outbreak, industry insiders told the Global Times.

Even if the local government allows work resumption after the epidemic is under control, it would take at least half a month for foreign carmakers to restart production, Li Kuan, a manager of the organizing committee of China (Wuhan) International Auto Parts Expo, said on Sunday, indicating the economic losses could elevate.

Li said that no sign of manufacturing activity resumption is within sight now. Hubei provincial government has ordered local companies not to resume work before March 11. 

"Even after restarting production, it will also take roughly one month and half for foreign joint ventures to bounce back to their full capacity as before the virus hit," Li added. 

As one of China's major auto production bases, Wuhan is home to a number of auto ventures funded by Japanese, American, French and German carmakers together with their Chinese partners, in particular, Dongfeng Motors. In addition, more than 500 auto parts suppliers are located in Wuhan. 

In 2018, the city produced more than 1.7 million units of vehicles a year, generating an industrial output value of 400 billion yuan.

It is not clear to what extent those foreign companies' global supply chain will be disrupted, but some public figures underscore a dire consequence.

For example, the sunroof produced by Webasto's Wuhan facility, the German firm's largest plant in the world, accounts for one third of its global output. Webasto supplies to leading carmakers including Audi and BMW.

"Some Wuhan parts suppliers now rely on stockpiles, but the stockpiles will run out soon. Another problem lies in the delivery network, which has not returned to normal," an auto industry insider told the Global Times. 

To dilute potential risks, some car manufactures have shifted assembly production line outside Wuhan city, while others also choose to outsource their orders, according to Li.


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