Global automakers put off restart of China plants’ operation over novel coronavirus concerns

Shanghai (Gasgoo)- January 31, which is supposed to be the first workday after the Lunar New Year holiday, failed to witness the restart of operation for most manufacturing industries in China. To minimize the negative influence from the novel coronavirus that emerged in Wuhan, Hubei Province last December before spreading countrywide, many local governments have required companies to resume operation no earlier than Feb. 10, another week later in accordance with the state's decision to extend the holiday.

Most global automakers which have businesses in the world's largest auto market also announced the decision to postpone the resumption of their China factories' production afterwards. Companies having joint ventures with Dongfeng Motor Corporation, the auto giant in the epicenter Wuhan, such as Honda, Nissan, PSA Groupe and Renault, certainly take the brunt of the fast-spreading virus. According to the Hubei provincial government's request, companies were not allowed to resume operation before Feb. 14.

Others like Toyota, Ford and even the startup Tesla have also determined to temporarily halt operation in China amid the national battle even though they don't have operations in Wuhan.

Toyota

Toyota Motor Corporation decided to postpone the restart of operations at four automobile plants until sometime after February 10 due to the severe novel coronavirus outbreak, Kyodo news agency reported.

The aforesaid auto plants are respectively located in Tianjin, Chengdu, Changchun and Nansha, which were formally scheduled to resume operations in early February. Up until now, the Japanese automaker hasn't set a date for the restart yet.

“We will monitor the situation and make further decisions on operations from Feb. 10,” said Maki Niimi, a spokesman for Toyota.

Honda

Honda Motor announced on January 28 it will delay the resumption of its motorcycle production at two plants in Tianjin and Taicang, which were supposed to be reopened after the Lunar New Year holiday ends on Jan. 30.

The decision is made in accordance with a request issued by local governments. The automaker's motorcycle business is based in Shanghai, whose local authority has urged enterprises in the city to restart operation no earlier than February 10 considering the rapid spread of the disease. Thus, its main office in Shanghai will be correspondingly reopened on February 10 or later.

Focusing on manufacturing two-wheeled vehicles for China market, the Tianjin and Taicang plants to-day possess annual capacity of 350,000 and 500,000 motorcycles respectively.

Honda also operates three automobile plants in Wuhan, which feature a combined annual capacity of more than 600,000 vehicles. The automaker said on Jan. 30 that it has decided to keep its Wuhan plants closed until Feb. 13, according to a Japanese media report.

Ford

Ford Motor does not have any joint ventures in Wuhan, but it also planned to resume the operation at the Chongqing-based plant of Changan Ford, a joint venture with Changan Automobile, on February 10.

Last year, Ford and its joint ventures in China sold 567,854 vehicles in the country, a year-on-year slump of 26.1%. However, Changan Ford has seemingly encountered a critical turning point to get sales pick up as the all-new Ford Escape hit the market in last December and the first China-built Lincoln-branded model, the Corsair, is to go on sale in March 2020. The put-off of plant operation will perhaps retard Ford’s step to get sales rebound in China.

In Chongqing, Hangzhou and Harbin, Ford currently operates seven manufacturing factories in total—five for complete vehicles and the other two focusing on engines and transmissions respectively. Of those, Chongqing has become Ford’s second biggest production base following Detroit.

Tesla

The EV manufacturer Tesla is also among the companies whose local production business has been delayed due to the virus.

“At this point we're expecting a one to one-and-a-half week delay in the ramp of Shanghai-built Model 3s due to a government required factory shutdown,” Tesla's chief financial officer Zachary Kirkhorn said during an earnings call on Jan. 29.

Tesla began delivering the first cars produced at its Shanghai-based Gigafactory 3 at the end of 2019, marking a milestone for the company as it wishes to fortify offensive in China, the world's largest EV market. As China's first wholly foreign-owned car plant, the Gigafactory 3 is also significant to China's auto development.