Posted on 18 Apr 2022
China's COVID-19 resurgence and the stringent measures being imposed by authorities to deal with it are creating issues for the country's automobile industry as major auto-manufacturing enterprises have been forced to halt production, industry sources said on April 15.
Since March 13, China FAW Group (FAW), China's largest auto manufacturer headquartered in Changchun city, Northeast China's Jilin province, has stopped its five automotive assembly plants in Changchun due to thousands of daily COVID-19 infections in the province by then. Production was yet to resume as of April 15 even though cases have dropping substantially recently and the government claimed it has brought the virus under control, according to a company official.
Meanwhile, from the beginning of April, Shanghai-based SAIC Motor, another leading automobile manufacturer based in Puxi district in Shanghai's west, has suspended part of its production, due to a shortage of automotive components amid the city-wise lockdown.
Shanghai, currently the epicenter of the country's COVID resurgence, had introduced lockdowns in Pudong and Puxi districts (the east and west half of the city) on March 28 and then replaced these with a city-wide measure from April 5, as Mysteel Global reported.
"Before the lockdown (in Puxi), we had been prepared to sleep at the plant and maintain production while being quarantined there, but when the time for the lockdown curfew approached, we were told to stop production and go home," an official from the company confirmed.
"As logistics have been impeded under lockdown, the auto components we need cannot be delivered to sustain production," he said.
In the meantime, new energy vehicle makers such as Tesla and Nio also suspended production in Shanghai from around the same time, according to local media reports.
"First it is Changchun, then Shanghai and now Guangzhou (in South China's Guangdong province); these are three of the six key automobile production bases in China and all are being impacted," an official of the auto sheet sales department of a leading steel producer based in North China observed.
Auto components manufacturers in the regions have also seen their production being affected, he pointed out. This means that not only car production in COVID-intensive regions is being hit but places with no or few infections are being challenged due to the disrupted supply chain.
"Changchun and Shanghai were the two earliest auto production bases set up in the country, so many auto parts makers have long been established in the two regions. They have also suspended operations due to the lockdowns," he explained, saying that slower auto production has negatively affected auto sheet sales in China.
Statistics showed that in March, domestic production of automobiles declined by 9.1% on year to 2.24 million units, which offset a large part of the gains recorded over the previous two months and made the total output in the first quarter rise by a mere 2% on year to 6.48 million units, as Mysteel Global reported.
The official believed that the situation might improve this quarter with restrictions on logistics being gradually eased, should the pandemic be successfully contained.
But the pandemic has already affected all aspects of life including people's income, so "having a car may no longer be regarded by some families as an essential expenditure item," he warned. This could possibly cause overall sales of the product to decline this year, he maintained.
Source:Mysteel Global
