Carmakers across the globe are struggling to find more parts and parts supply chains as the spread of the corona virus is rocking the market, disrupting automakers’ manufacturing processes.
China’s auto industry is crippled
China is the largest automobile market in the world and Wuhan (Hubei province) – the heart of the city of Covid-19, is known as the capital of the automotive industry by automakers such as General Motors and Honda. , Nissan, Peugeot Group and Renault all have manufacturing plants here.
As for Honda, the automobile manufacturer in Wuhan accounts for about 50% of the total production of Chinese automakers. In 2019, Wuhan was honored as the fourth largest automobile production place in China, accounting for about 10% of the country’s automobile production capacity, equivalent to 2.24 million vehicles per year.
When the Covid-19 epidemic spread and there was a strong outbreak, many car manufacturers in Wuhan in particular and China in general were forced to close. In addition to Wuhan-based automobile companies, Tesla’s new factory in Shanghai is also closed and shut down, resulting in a delay in Model 3 production.
As a result, car sales in China dropped by 92% in the first half of February this year, and 80% in the whole of February, according to data from the China Passenger Car Association CPCA.
And recently, the China Automobile Manufacturers Association CAAM forecasts that domestic sales of cars will fall 10% in the first half of 2020 and down 5% for the whole year. At the same time, if the closure of many factories continues until mid-March, it is likely that the number of new cars in China will decrease to 1.7 million units.
In Asia, Honda has announced production cuts of two production plants at home in the context of a discontinued supply chain from China. The same scenario happened with fellow automaker Nissan when it decided to cut production during the four days of February and suspend production on Saturdays and Sundays of March at its factory in Fukuoka Prefecture. .
At the same time, some Mazda cars have not been launched due to the same reason. It is estimated that vehicle production of the top five Japanese automobile manufacturers (including Toyota, Nissan, Mitsubishi and Mazda) will decrease by 580,000 units between January and April this year, leading to a drop in annual profit. 170 billion yen (equivalent to 1.6 billion USD) due to Covid-19.
Earlier, Hyundai – a Korean car company announced the closure of its factory in its home country when an employee working there was confirmed positive for corona virus. The sister car company Kia also suspended some assembly lines in South Korea.
United Auto Workers officials also said General Motors is in a shortage of North American truck parts and accessories.
Meanwhile, Fiat Chrysler said one of its European factories was forced to suspend its production until the end of February and is now seeking suppliers to replace the companies. company in China. In addition, Jaguar Land Rover also warned that the corona virus could cause a delay at its assembly plants in the UK.
Indian automakers Maruti Suzuki, Mahindra and Tata Motors are also in danger of running out of components and spare parts in March.
Along with that, car sales of automakers in February also decreased significantly, namely Mahindra down 42%, Tata Motors down 34% and Maruti Suzuki down 1.6% over the same period last year.
In addition, the corona virus is also dealing a strong blow to the value of car manufacturers. Shares of GM and Ford Motor both fell to double digits this year, down about 12% last week.
Even Tesla’s stock has started plunging, down 25.9% since February 21. In addition, a series of major events of the year such as the Geneva Motor Show 2020 or the Formula 1 race will be postponed indefinitely.
Car manufacturers “jump in numbers” to recover
The auto industry is a unique industry where manufacturing plants often operate without a major stockpile of vehicle parts and components. This makes it vulnerable to corona virus outbreaks and spread outside of China.
It is the disruption in China’s supply chain that has led to widespread disruptions that affect millions, even billions of products from automakers. This also helps explain why auto companies are rushing to find alternatives.
Many traditional automotive brands such as Volkswagen, Nissan, SAIC and BMW are seeking a marketing channel for new products. Instead of displaying their models in showrooms, carmakers have turned to online shopping through websites and online livestreams, both to meet consumers’ buying needs and to cheat. eliminating the fear of infection compared to the traditional sales method.
Carmakers also begged the government for offering subsidies to stimulate the domestic market. In particular, the British car industry requires the government to introduce new policies to boost the market with the upcoming budget and to ensure a free trade agreement with the EU to stimulate the market. domestic consumption. And the Chinese government has chosen to help new car buyers with certain money.
In addition, to deal with the shortage of masks and handwashing water, many companies such as SAIC-GM-Wuling, BYD Co. or GAC Motor Co. has announced its involvement in the production of the aforementioned products to help employees as well as bus drivers and volunteer groups avoid the risk of virus infection.
Which scenario for the world automobile industry after the “crisis” Covid-19?
Facing unpredictable developments of the Covid-19 epidemic, the famous Wall Street Bank of Goldman Sachs predicts that global car sales will decrease by 3.5% in 2020, instead of 0.3% as expected before. there. Even when the factories of the manufacturers also take some time to operate at full capacity due to the shortage of labor and assembly components.