China’s Automotive Industry Slowly Returns to Work amid Coronavirus Outbreak

The world’s automotive manufacturers have been among the most affected industries by the coronavirus outbreak. Thus far South Korea’s Hyundai Motor Group has shut down several plants due to lack of components from China. Similarly, Fiat Chrysler may be forced to shut down one of its European facilities if new parts do not arrive soon. While production in China is beginning to resume, there are some important facts to consider.

Reduced Production Capacity

As those in manufacturing know, it takes time to get a production facility up to full capacity after a full shut-down. This coupled with major disruptions in personnel and supply lines will mean delays in the best of scenarios. Dezan Shira, a consulting firm with offices across Asia, estimates that factories across China will be operating at 80% capacity by the end of this month, with those closest to Wuhan and Hubei province being impacted much more significantly.

Buyers should also be aware that Wuhan and Hubei Province serve as a major production center for China’s automotive industry and that these are currently on lockdown as a result of the coronavirus outbreak. Zhejiang Province, another major manufacturing and exporting hub south of Shanghai is also in a state of limited lockdown.

Big Manufacturers Cautiously Resume China Operations

China is a major manufacturing hub for major auto manufacturers, both in terms of its domestic market and exports. Toyota has announced that three of its four major plants in China have resumed operations this week. Nissan has also resumed operations, as have BMW and Ford. The Volkswagen group, China’s largest automotive brand in terms of sales, has stated that six of its fourteen Chinese jointly-operated plants have resumed production: Standard and Poor recently cited that Volkswagen Group as the auto manufacturer that has been hardest hit by this crisis.

Seeking Alternatives

Automotive manufacturing and service businesses of all sizes from across the globe have been among the hardest hit by the coronavirus outbreak. As many businesses examine their supply chains to better navigate this crisis, they will find alternative producers across Asia.

Some of Asia’s largest automotive and auto part manufacturers include Thailand, which has become colloquially known as the ‘Detroit of Asia’, as well as Indonesia, Vietnam, and Malaysia. These countries offer a variety of benefits including low labor costs, and favorable international trade agreements; however, there are always risks with new suppliers. For this reason, we always recommend working with a third party quality assurance company to ensure your standards are always met and disruptions are kept to a minimum.

About HQTS

With over 25 years of experience in quality assurance, HQTS is ready to help your business build strong and meaningful supplier relationships across Asia. Our many service locations are ready to be your one-stop shop for your automotive inspection needs, including  factory audits, production monitoring, pre-shipment and sorting inspections, and everything in between. Contact us today to find out how we can help you navigate current sourcing challenges in today’s automotive market.